Gustavo Ballvé on January 11th, 2012
Banks, Corporate Strategy, Food for thought, Home, Industries, Mental models

Researchers have not been able to find a link between banker compensation and short-term performance metrics, the sort of link that might have led to excessive risk-taking. In their words, their finding “refutes the suggestion that incentive structures in banks could be blamed for the crisis”. As we were reading the study’s description, we were alarmed that the professor equated “short-term performance” with the short-term movements in share prices, which is not necessarily how compensation is set in banks.

Then we found a post by the Epicurean Dealmaker that destroys the study precisely on these arguments. As he says after presenting his points, “Perhaps one day some academic will actually make the effort to understand how my industry works before they design a study to explain it”. And as he says, we also yearn for a good study into the subject.

Tags: , , , , , ,

Comments are closed.


Back to last page or go to the home page