Examining the Relationship between Human Resource Expenses and Enterprise Value: Focusing on Companies Listed on the Korean Financial Markets

In today's rapidly changing environment, the importance of human resource is growing, but it is necessary to review whether human resource expenditure such as welfare expenses and education & training expenses is a just expense or can create value like an asset in the future.This study attempts to analyze the effect of spending on human resources, such as welfare expenses and education & training expenses on the enterprise value of listed companies in the Korean financial markets from 2000 to 2021, and the total sample size is 24,195 companies.In this study, the relationship between human resource expenses and enterprise value is analyzed.Specifically, in this study, Ohlson (1995) firm valuation model is used to analyze the relationship between education & training expenses and welfare benefits expenses and stock prices by studying the relationship.In particular, this study investigated linear and nonlinear impacts of human resource expenses on enterprise value.Human resource expenses proxy measures included welfare, training, and total costs.Regression analyses based on the Ohlson model revealed statistically significant positive linear effects of all three expense factors on firm value.However, nonlinear specifications indicated inverted U-shaped relationships, suggesting value gains up to an optimal threshold before turning negative at higher cost levels.This research provides evidence that determines whether expenditure on human resource is only an expense element or an asset that can generate future long-term cash flows.The findings highlight the potential of human resource expenses to enhance enterprise value, while emphasizing the need for targeted investment balancing positive returns and excess cost risks.It also provides evidence to review the specific value relevance form of human resource expenses and provides a basis for the implementation of a company expense policy on human resource.