임원의 재무전문성이 퇴직연금 적립률에 미치는 영향

Abstract

[Purpose] This study examines the impact of executives’ financial expertise on the funding level of defined benefit pension plans. On one hand, if executives with high financial expertise prefer to utilize available cash for more efficient investment options rather than locking it up in pension contributions, a negative relationship is expected. On the other hand, if executives with high financial expertise aim to increase the current funding level to alleviate future cash constraints or are concerned about negative evaluations in the capital market, a positive relationship is expected. The empirical analysis seeks to determine whether executives’ financial expertise lowers or raises the pension funding level. [Methodology] The sample for analysis consists of companies listed on the KOSPI and KOSDAQ from 2012 to 2022 that have adopted a defined benefit pension plan. Although the pension system was implemented in 2005, the initial period is excluded due to the low adoption rate of pension plans and the low funding ratio of defined benefit assets at the beginning of the system’s implementation. Executives’ financial expertise is measured by executives with keywords in their past careers such as finance, accounting, treasury, or CFO, and the pension funding level is measured by the ratio of pension assets to pension liabilities. [Findings] The empirical analysis shows that the higher the proportion of executives with financial expertise, the lower the pension funding level. This result can be interpreted as companies with executives having high financial expertise maintaining a lower funding level due to the high opportunity cost of investing available cash in pension contributions. Additionally, we find that the negative relationship between executives’ financial expertise and the pension funding level is driven by the subsample with a high funding level. [Implications] The results of this study provide evidence that for the pension system to act as a means of securing workers’ retirement income, an improvement in the return on pension assets is necessary.