금융기업 CEO의 사회적 자본이 미치는 영향

초록

This paper explores the potential consequences of CEO’s social capital in the financial industry. Individual social capital can play a significant role by facilitating the acquisition of valuable information in the market and promoting cooperation among stakeholders. However, an intensive social capital makes the CEO more powerful, reducing the monitoring effect on the CEO. This suggests that the CEO’s social capital may have a dark side by inducing agency problems. In particular, it is unsurprising that agency problems between management and shareholders occasionally occur in the Korean financial industry due to the lack of a strong majority shareholder. Using a sample of Korean publicly-traded financial corporations from 2015 to 2023, I find that financial CEO social capital induces their firm’s risk-taking as proxied by stock return volatility and the expected default frequency. However, there is no evidence that financial CEO social capital improves corporate performance, while it significantly increases CEO pay. Furthermore, the incremental effect of financial CEO social capital on risk-taking is mitigated by independent boards, but it is salient for younger CEOs who are likely to have career concerns. The empirical results suggest that the financial firm’s CEO social capital may lead to severe agency problems. Overall, this paper implies that CEO social capital can be a proxy for CEO power or agency costs in the financial industry, highlighting the importance of effective internal control and corporate governance.

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