Basel III and CEO compensation in banks: pay structures as a regulatory signal : [March 6, 2013]
- This paper proposes a new regulatory approach that implements capital requirements contingent on managerial compensation. We argue that excessive risk taking in the financial sector originates from the shareholder moral hazard created by government guarantees rather than from corporate governance failures within banks. The idea of the proposed regulation is to utilize the compensation scheme to drive a wedge between the interests of top management and shareholders to counteract shareholder risk-shifting incentives. The decisive advantage of this approach compared to existing regulation is that the regulator does not need to be able to properly measure the bank investment risk, which has been shown to be a difficult task during the 2008-2009 financial crisis.
| Author: | Christian Eufinger, Andrej GillORCiDGND |
|---|---|
| URN: | urn:nbn:de:hebis:30:3-293795 |
| URL: | http://ssrn.com/abstract=2231964 |
| DOI: | https://doi.org/10.2139/ssrn.2231964 |
| Parent Title (German): | SAFE working paper series ; No. 9 |
| Series (Serial Number): | SAFE working paper (9) |
| Publisher: | Goethe-Univ., House of Finance, Sustainable Architecture for Finance in Europe, SAFE |
| Place of publication: | Frankfurt am Main |
| Document Type: | Working Paper |
| Language: | English |
| Year of Completion: | 2013 |
| Year of first Publication: | 2013 |
| Publishing Institution: | Universitätsbibliothek Johann Christian Senckenberg |
| Release Date: | 2013/04/18 |
| Tag: | Basel III; capital regulation; compensation; leverage; risk |
| Issue: | March 6, 2013 |
| Page Number: | 25 |
| HeBIS-PPN: | 337758174 |
| Institutes: | Wirtschaftswissenschaften / Wirtschaftswissenschaften |
| Wissenschaftliche Zentren und koordinierte Programme / House of Finance (HoF) | |
| Wissenschaftliche Zentren und koordinierte Programme / Center for Financial Studies (CFS) | |
| Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
| Sammlungen: | Universitätspublikationen |
| Licence (German): |  Deutsches Urheberrecht |
