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research article

Bank CEO incentives and the credit crisis

Fahlenbrach, Ruediger  
•
Stulz, Rene M.
2011
Journal Of Financial Economics

We investigate whether bank performance during the recent credit crisis is related to chief executive officer (CEO) incentives before the crisis. We find some evidence that banks with CEOs whose incentives were better aligned with the interests of shareholders performed worse and no evidence that they performed better. Banks with higher option compensation and a larger fraction of compensation in cash bonuses for their CEOs did not perform worse during the crisis. Bank CEOs did not reduce their holdings of shares in anticipation of the crisis or during the crisis. Consequently, they suffered extremely large wealth losses in the wake of the crisis.

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Type
research article
DOI
10.1016/j.jfineco.2010.08.010
Web of Science ID

WOS:000284679300002

Author(s)
Fahlenbrach, Ruediger  
Stulz, Rene M.
Date Issued

2011

Published in
Journal Of Financial Economics
Volume

99

Start page

11

End page

26

Subjects

Financial crisis

•

CEO compensation

•

CEO incentives

•

Insider trading

•

Market-Efficiency

•

Performance

•

Compensation

•

Pay

•

Ownership

Editorial or Peer reviewed

REVIEWED

Written at

EPFL

EPFL units
SFI-RF  
Available on Infoscience
December 16, 2011
Use this identifier to reference this record
https://infoscience.epfl.ch/handle/20.500.14299/74552
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