tag:blogger.com,1999:blog-4528146969570948529.post4232104112058144026..comments2024-03-21T22:51:03.977-04:00Comments on Models & Agents: Playing the bankers’ advocate…Chevellehttp://www.blogger.com/profile/10769905202655777736noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-4528146969570948529.post-68657934011084989092009-02-22T07:33:00.000-05:002009-02-22T07:33:00.000-05:00Under (2), you say three scenarios, but only list ...Under (2), you say three scenarios, but only list two. Odd. What's the third? <BR/><BR/>Here is my guess. Another phenomenon that leads to bankers being overpaid (as they indisputably were for quite some time) is the difference in incentives and interests between a firm's employees and shareholders. Shareholders have serious structural problems supervising corporate management, and once corporate pay levels get out of control industrywide it is difficult for shareholders to rein them in at any individual firm (without seeming to signal that their firm is a poor investment, etc). So industrywide cost controls may well be justified to deal with this structural problem, at least in finance. (Industries that actually generate value rather than destroying it -- like software and biotech -- should not be treated this way of course.)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4528146969570948529.post-67995046838016210392009-02-20T10:01:00.000-05:002009-02-20T10:01:00.000-05:00Part of the big fat failure of ownership comes by ...Part of the big fat failure of ownership comes by virtue of the fact the fund managers and pension fund managers, wield undue influence over corporate decisions including remuneration. The block votes are derived from stock that is paid for by their investors, who don't get a vote. <BR/><BR/>There is at least the appearance of a nepotistic clique within the corporate elite that results in senior executives in fund management waving through excessive remuneration for bankers, because guess who sits on their non executive board for remuneration.Anonymousnoreply@blogger.com