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상품시장에서의 경쟁과 기업의 위험추구

  • 이지혜 고려대학교 부설 기업지배구조연구소 연구원
  • 변희섭 한림대학교 경영대학 재무금융학과 조교수
본 연구는 상품시장에서의 경쟁위협이 기업의 위험추구행태에 미치는 영향을 실증적으로 확인한다. 실증분석 결과, 경쟁위협의 증가는 기업의 위험추구행태를 약화시키는 것으로 나타났다. 이는 경쟁위협에 기인한 투자위험 및 파산비용의 증가로 인해 기업의 위험추구 성향이 약화되기 때문으로 해석이 가능하며, 대리인이론 측면에서 상품시장에서의 경쟁이 일종의 경영통제장치로 이해될 수 있음을 의미한다. 추가적으로 기업의 위험추구행태와 상품시장에서의 경쟁 수준에 대한 다양한 대용치를 활용한 경우, 내생성 문제를 통제한 경우, 산업수준에서의 분석을 수행한 경우에도 동일한 결과가 관찰되어 강건성을 확인할 수 있었다. 또한 이러한 결과는 시장점유율이 낮거나, 대규모 기업집단에 소속되지 않아 경쟁위협에 대한 민감도가 클 것으로 예상되는 기업에서 보다 강하게 관찰되었다. 한편, 경영통제장치로서 좋은 지배구조는 기업의 위험추구행태를 약화시키는 것으로 나타났으며, 이러한 효과는 비경쟁적인 상품시장에서만 주로 관찰되고, 경쟁적인 상품 시장에서는 사라지는 것으로 확인되었다. 이는 지배구조가 기업의 과도한 위험추구행태를 통제하는 효과가 상품시장에서의 경쟁위협에 의해 대체될 수 있음을 의미한다. 본 연구의 결과는 국내 자본시장에서 다양한 재무적 의사결정과 연관되는 기업의 위험추구행태와 상품시장에서의 경쟁 간의 관계를 최초로 제시함으로써, 향후 시장구조 형성에 관련한 정책 입안시 중요한 시사점을 제공할 수 있을 것으로 판단된다.
상품시장에서의 경쟁, 위험추구, 외부 경영통제장치, 시장지배력, 기업지배구조

Product Market Competition and Corporate Risk-Taking

  • Ji Hye Lee
  • Hee Sub Byun
We examine how competitive threat in a product market, as an external environmental factor of the firm, influences corporate risk-taking behavior. Product market competition as a control mechanism is an issue of growing importance in the academic field of corporate finance (Giroud and Mueller, 2011; Kim and Lu, 2011). Firms in competitive industries have high investment and bankruptcy risks and low marginal profits, and thus need to lower their production costs to gain a competitive edge. Moreover, to decrease the cost of capital and signal the firm’s reputation to the market, firms should reveal their inside information and alleviate information asymmetry. Competitive threat is also an important factor in agency theory, as it is related to managerial compensation (Karuna, 2007) and to management’s pursuit of private benefits of control. In sum, competitive threat influences managerial decisions in various ways. Therefore, we investigate the relationship between competitive threat and firms’ risk-taking behavior to better understand its role as an external control device. The relationship between product market competition and corporate risk-taking behavior is not yet theoretically defined; therefore, empirical evidence from this study will provide significant academic and practical implications. One strand of the literature argues that managers should be reluctant to pursue risk in a competitive environment, due to the high risk of bankruptcy (Griffith, 2001) and high turnover sensitivity based on performance. Managers are expected to build conservative investment portfolios to lower the cost of capital. A similar argument is that competitive threat mitigates the risk-pursuing behavior of management based on the overinvestment incentive (Alchian, 1950; Stigler, 1958). The other strand of the literature argues that firms in competitive industries pursue more risks to acquire market power and a competitive edge. Under strong competition, managers are endowed with greater discretion to make managerial decisions quickly (Hubbard and Palia, 1995; Christie, Joye, and Watts, 2003), and hence can take risks to make large profits. In addition, in a competitive environment with lower profits, managers might pursue higher risks to increase their monetary compensation (Hernalin, 1992; Raith, 2003), or pursue private benefits by overinvesting in risky projects. We empirically investigate which of these two competing theories is supported in the Korean economy. This is the first study to empirically examine the effect of product market competition on corporate risk-taking behavior in the Korean economy. External factors that influence risk-taking behavior are not actively discussed in the academic field, thus we aim to fill this academic gap. Moreover, we extend recent studies that analyze the effect of product market competition by investigating its effect on firms’ risk-taking behavior. Under the agency theory, we test the disciplinary effect of competition in the Korean product market and explain how it disciplines managers or agency problems based on the risk-taking behavior of controlling shareholders. We use firms listed on the Korean Stock Exchange and run regressions while controlling for various firm characteristics and environmental factors. Measuring the level of product market competition, we use the Herfindahl-Hirschman index, which is commonly used in the field of corporate finance and industrial organization. To estimate corporate risk-taking behavior, we follow previous studies in using the standard deviation of the profit or net income over the past five years, standardized by total assets. Empirically, we find that competitive threat has a significantly negative effect on corporate risk-taking behavior. This means that managers burdened by high investment risks and bankruptcy costs in more competitive product markets do not want to form risky investment portfolios. It also implies that competitive threat can be considered as an external control device in the agency framework. The result is robust to control of the potential endogeneity problem, and to the use of alternative proxies for the level of product market competition and corporate risk-taking behavior. Furthermore, we find similar results when we perform an industry-level analysis. Our result is more strongly observed in firms with a low market share and those that do not belong to business groups. Meanwhile, examining the effect of the interaction between corporate governance and product market competition on corporate risk-taking behavior, we find that firms with good corporate governance are less likely to pursue risk. However, the negative effect of corporate governance on corporate risk-taking behavior exists only in less competitive product markets. We interpret this result as indicating that there is a substitution effect between internal corporate governance and competitive threat in product markets in determining corporate risk-taking behavior.
Product Market Competition, Corporate Risk-Taking, External Control Device, Market Power, Internal Corporate Governance