Deferred bonuses won't curb risk-taking, research finds

Malus could be a more effective tool to influence risky behaviour, says author


Deferred bonuses, along with 'clawback' rules, have been widely praised as a way to curb excessive risk-taking by front-office investors too focused on their own short-term benefit. But, argues University of Mainz economist Dietmar Leisen in a newly published paper, the concepts may have completely the opposite effect in practice.

Leisen's research uses a straightforward model in which a manager's bonus is related to changes in asset value by a fixed ratio ('pay-for-performance sensitivity'), in

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