Abstract

http://ssrn.com/abstract=1772769
 
 

References (36)



 


 



CEO Behavior and Subprime Mortgage Crisis


Guangdi Gordon Chang


National Taiwan University of Science and Technology

Fulwood Chen


National Taiwan University of Science and Technology

February, 28 2011


Abstract:     
The paper integrates agency theory with the asset-pricing model to explore causes of subprime mortgage crisis regarding the role of CEOs in financial firms. When maximizing their interests, CEOs behave under the influence of incentive structures, peer pressure and market power. Increasing peer pressure, high-incentive compensation schedule and declining market power increase CEOs’ appetite for risk. For avoiding CEOs’ procyclical behavior and aligning the interests of both firms and CEOs, we conclude that pay incentives could be reversed against the changes in market conditions; the relative performance evaluation be embedded into CEOs’ compensation schedule; the time span for performance evaluation be lengthened.

Number of Pages in PDF File: 27

Keywords: subprime mortgage, financial crisis, incentive structures, peer performance index, market power

JEL Classification: D01, G21, M52

working papers series


Download This Paper

Date posted: February 28, 2011  

Suggested Citation

Chang, Guangdi Gordon and Chen, Fulwood, CEO Behavior and Subprime Mortgage Crisis (February, 28 2011). Available at SSRN: http://ssrn.com/abstract=1772769 or http://dx.doi.org/10.2139/ssrn.1772769

Contact Information

Guangdi Gordon Chang (Contact Author)
National Taiwan University of Science and Technology ( email )
Keelung Road
Sec 43
Taipei
Taiwan
Fulwood Chen
National Taiwan University of Science and Technology ( email )
Keelung Road
Sec 43
Taipei
Taiwan
Feedback to SSRN


Paper statistics
Abstract Views: 480
Downloads: 100
Download Rank: 155,286
References:  36

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.282 seconds