Do Labor Markets Discipline? Evidence from RMBS Bankers
64 Pages
Posted: 1 Jun 2017
Last revised: 28 Jul 2017
University of Texas at Austin - Department of Finance
University of Texas at Austin - Department of Finance
Emory University - Goizueta Business School
Date Written: July 27, 2017
Abstract
Predicated on economic theory predicting that firms and labor markets discipline individual employees, banks paid record civil penalties for their role in fraudulent RMBS underwriting. We find no evidence that senior RMBS bankers at top banks suffered from lower job retention, fewer promotions, or worse job opportunities at other firms compared to their counterparts in non-fraudulent areas. The findings do not appear to be driven by targeted employee discipline, discipline following public scrutiny, smaller fines, or purely a desire to protect employees due to pending litigation. The evidence is most consistent with implicit upper-management approval of RMBS activities.
Keywords: RMBS fraud, labor market discipline, financial crisis
JEL Classification: G24, G28, J44, K42
Suggested Citation:
Suggested Citation
Griffin, John M. and Kruger, Samuel A. and Maturana, Gonzalo, Do Labor Markets Discipline? Evidence from RMBS Bankers (July 27, 2017). Available at SSRN: https://ssrn.com/abstract=2977741
