Bankers' bonuses not to blame

[Von Bismarck]

The study of executive pay found that although pay in the financial services sector is high, compared to other industries there is no evidence to support the argument that inappropriate incentive structures led banking executives to take excessive risks for short-term profits.

The suggested dependence of bonus payments on short-term corporate performance has led to the notion that bankers were over-incentivised to take risks, and was named as a factor behind the crisis in the Turner Report (commissioned by the government to make recommendations for regulatory reform in the banking industry).

To investigate this claim, researchers correlated directors pay in any year with the share price performance of the company in the same year, to see what the relationship was between pay and performance. They concluded that it was weak.

Bankers' bonuses not to blame, shows new research

[Rafterman]

Probably not going to get much traction with this around here.

[lightly]

OK , so they weren't rewarded for promoting excessive risk.. they were rewarded for what? Doing a bad job ?

Edited December 14, 2011 by lightly

[randym23]

the government (who has been favoring corporations/banks for years)

investigates banks? I don't think that is completely impartial.

[Mr_Snstr]

the government (who has been favoring corporations/banks for years)

investigates banks? I don't think that is completely impartial.

This study brought to you by a joint effort from the ABA* and APA**. They also concluded that you should give more money to banks, and more votes for politicians. Follow-up study will determine which banks and which politicians.

*American Bankers Association

**American Politition Association