Banks are regularly under scrutiny for their professional and ethical behaviour. This column assesses the role of boards in monitoring and advising conduct, and offers new insights for how to structure bank boards to prevent misconduct. Conventional board measures such as board independence and financial expertise have no measurable impact on misconduct being committed or detected. Instead, governance metrics revolving around CEO connections warrant more attention from regulators, investors, and governance activists.
Louis Nguyen, Jens Hagendorff, Arman Eshraghi, 30 September 2016
Dalia Marin , Jan Schymik, Alexander Tarasov, 19 March 2016
In the last decades the world economy has seen firms organise production into global value chains, decentralise their systems of command to incentivise workers, and start compensating CEOs with skyrocketing earnings. This column uses new data on German and Austrian firms to show that managerial offshoring to eastern Europe has increased decentralised management by 6.8% in relatively open sectors, but it has lowered the relative wages of executives in Germany and Austria by 4.9%.
Stefania Albanesi, Claudia Olivetti, María Prados, 21 December 2015
The gender gap in the workplace persists, affecting women in professional and managerial occupations the most. This column looks at the gender gap among top executives at Standard & Poor’s firms and suggests that performance-related pay schemes should be better scrutinised. Increasing transparency of an executive’s compensation relative to others in similar positions might go some way towards mitigating gender pay inequality for top executives.
Aspen Gorry, Kevin Hassett, Glenn Hubbard, Aparna Mathur, 19 October 2015
As the tabloid press and broadsheet newspapers often report, executive compensation has grown dramatically since the 1980s and continues to rise in most financial centres. This column looks at how compensating executives has changed in recent years, and suggests ways that governments can collect revenue more effectively in response.
Alex Edmans, 11 September 2014
Executive pay is a controversial political issue with big implications for firm performance. Although public debate focuses on the level of compensation – or at best its sensitivity to firm performance – this column argues that the key issue is its temporal structure. A well designed payment structure can align CEO incentives with long-term shareholder value. The authors recommend lengthening the vesting period of equity and options.
Alex Bryson, John Forth, Minghai Zhou, 24 June 2014
Publicly traded companies are the engine behind China’s growth, which raises the question of how CEO compensation works under an interventionist state. This column presents an analysis of executive compensation in China and a comparison to the West. Chinese listed firms have incentive structures similar to those of the US; in this case, effective compensation policies seem to transcend political boundaries.
Andrea Prat, Oriana Bandiera, Luigi Guiso, Raffaella Sadun, 28 May 2011
What do CEOs get up to all day? Most accounts are based on surprisingly small samples. A new study of how CEOs allocate their time yields some surprising results.
Alex Edmans, 13 July 2010
Recovering US insurance giant AIG recently announced that 80% of their executives’ bonuses will depend on the price of their firm’s bonds and only 20% will depend on the price of their equity. This column argues that such moves will better align CEO fortunes with those of all investors – both shareholders and bondholders – and help prevent future financial crises.