방위산업의 경영자 유인체계에 관한 연구 : 성과－보상 민감도를 중심으로

[Purpose] Unlike previous studies that focused on opportunistic decision－making indefense companies, this study examines the internal control systems designed to regulatemanagerial opportunistic decision－making. [Methodology] This study analyzed the pay－for－performance sensitivity based onrevenues and expenses for 257 defense industry firm－years listed on the Korea Exchangeand KOSDAQ markets from 2009 to 2020. We also investigated how the pay－forperformancesensitivity changes when the conservatism of defense contracts is relaxed. [Findings] Pay－for－performance sensitivity based on accounting expenses is relativelylower than that based on accounting revenues, and the sensitivity to accounting expensesincreases as the operating profit margin increases. This suggests that cost shieldingphenomena are observed in defense companies, which seems to control the opportunisticunderinvestment by managers of defense companies. Moreover, relaxing the conservatism ofdefense contracts means providing managers with a higher incentive for cost reduction. [Implications] The results of this study suggest that defense companies internally control theopportunistic decision－making of managers through compensation system. To provideappropriate economic incentives in the defense industry, it also provides policy implicationsthat deregulation and the business efficiency through improvements in the managementenvironment are needed to provide appropriate economic incentives in the defense industry.