High and Low Finance – It May Be Outrageous, but Wall Street Pay Didn’t Cause This Crisis – NYTimes.com
A new study shows that banks run by chief executives with a lot of stock were, if anything, likely to do worse than other banks in the crisis.
“Bank C.E.O. incentives cannot be blamed for the credit crisis or for the performance of banks during the crisis,” states the study, by René Stulz, an Ohio State University finance professor, and Rüdiger Fahlenbrach of the Swiss Federal Institute of Technology.
“A plausible explanation for these findings is that C.E.O.’s focused on the interests of their shareholders in the build-up to the crisis and took actions that they believed the market would welcome,” Mr. Stulz said.