종업원지주제도(ESOP) 도입을 통한 종업원의 영향력 강화가 기업경영과 기업가치에 미치는 영향 = The Effect of ESOP on Firm Performance and Value

다국어 초록 (Multilingual Abstract)

This paper analyzes the effect of the introduction of ESOPs on the management of Korean companies listed on the Korea Stock Exchange and on their firm values through an interactive dynamics with labor unions. One main objective of ESOPs is to lessen the conflicts of interests between the shareholders and the employees of a company by aligning their economic incentives. However, the paper sets up a hypothesis that ESOP might be exploited to strengthen the interest of employees as fixed wage earners by taking advantage of their voting rights to participate in corporate management, thus leading to more conflicts of interests with shareholders rather than aligning the interest of employees with that of shareholders. It is generally true that not many countries legally allow employees to officially participate in the management of their companies. Germany is one exception where the representatives of labor unions sit on the supervisory board of directors under its two-tier board system. One main reason for employees not to be allowed to participate in corporate managements would be due to their differential economic incentives from those of shareholders: Employees` main economic compensations are salaries which are mostly of fixed components while shareholders benefit from increasing revenues of their companies. This implies that shareholders have a strong incentive to take risk in their business decisions while employees would not do so as long as operating income exceeds their wage level. However, it is also a fact that employees do exercise some influence on the management of their companies and many existing literatures confirm such influence. The purpose of the paper is to empirically check such a possibility in Korean companies. Previous studies on the issue have approached the subject by analyzing the effect of labor participation or the introduction of ESOPs on corporate management separately, and have not considered their combined effect. We extend the existing research by analyzing whether the effect of labor participation in corporate management would be affected by the introduction of ESOPs in Korean companies. We expect that stronger labor unions would lead to lower investments in R&Ds, lower sales growth rates, lower dividend payout ratios, and lower firm values measured by Tobin`s Q. Strong labor unions would be negatively correlated with even employment growth rates since they would want to protect their vested interests at the sacrifice of future employees. On the other hand, we conjecture that ESOPs would be positively correlated with those variables since in theory they would align the incentives of employees with those of shareholders. However, we also conjecture the opposite since there is a very high chance that ESOPs are exploited as a channel for employees to officially participate in the management of their companies and strengthen the fixed component of their economic compensation. Especially, when the ownership structure is dispersed widely and there is no controlling shareholder so that a professional group of managers are in charge of the management, then the latter might be in a position to secure the support of employees to defend their control and therefore might be willing to succumb to the requests of employees in corporate decision making. The empirical analyses using the fixed effect panel model show that the introduction of ESOP negatively affects firm values, and that labor unions have negative effects on corporate behaviors and firm values. We also find that the negative effects of labor unions are stronger when there exists no controlling shareholder. Such results imply that, contrary to its original objective, ESOPs may not work to align the incentives of shareholders and employees, but rather strengthen the fixed claims of employees. It also implies that existence of a controlling shareholder can have a positive effect on the management of a company through his counter balancing role against the self interested demand of employees.

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