Before and during the crisis of 2008, many bank managers, board members, auditors and rating agencies somehow managed to contribute, as if through a concerted effort, to one of the largest speculative bubbles in history. What did all these people have in common? Strong and well-aligned incentives.
Incentives matter – and not only to managers but to shareholders and directors too. When managers’ remuneration is mainly equity-based and shareholders are dispersed, both will favour a riskier strate
The week on Risk.net, December 2–8, 2017Receive this by email