• Login
    View Item 
    •   Home
    • Faculty/ Researcher Works
    • Faculty/ Researcher Works
    • View Item
    •   Home
    • Faculty/ Researcher Works
    • Faculty/ Researcher Works
    • View Item
    JavaScript is disabled for your browser. Some features of this site may not work without it.

    Browse

    All of TUScholarShareCommunitiesDateAuthorsTitlesSubjectsGenresThis CollectionDateAuthorsTitlesSubjectsGenres

    My Account

    LoginRegister

    Help

    AboutPeoplePoliciesHelp for DepositorsData DepositFAQs

    Statistics

    Most Popular ItemsStatistics by CountryMost Popular Authors

    The Pattern in Securitization and Executive Compensation: Evidence and Regulatory Implications

    • CSV
    • RefMan
    • EndNote
    • BibTex
    • RefWorks
    Thumbnail
    Name:
    Lipson-JournalArticle-2015.pdf
    Size:
    2.820Mb
    Format:
    PDF
    Download
    Genre
    Journal article
    Date
    2015
    Author
    Lipson, Jonathan C.
    Martin, Rachel
    Matsumura, Ella Mae
    Unlu, Emre
    Subject
    Securitization
    Executive compensation
    Banks
    Dodd-Frank
    Agency costs
    Permanent link to this record
    http://hdl.handle.net/20.500.12613/7455
    
    Metadata
    Show full item record
    DOI
    http://dx.doi.org/10.34944/dspace/7433
    Abstract
    The Dodd-Frank financial reforms of 2010 promised to better align risk-reward incentives by, among other things, reducing imprudent securitzation (i.e., sales of financial assets) and excessive executive compensation. This would, in turn, promote systemic stability. To assess whether Dodd-Frank’s elaborate rules on securitization and compensation are likely to achieve this goal, we explore the connection between the two empirically. Using a unique dataset covering 1993-2009 — the largest of its kind — we find that securitizing banks (regulated depositaries) on average paid their CEOs twice as much as non-securitizing banks, a finding that is both statistically and economically significant. By contrast, non-bank (industrial) firms that securitized actually paid their CEOs less than non-securitizers. Because securitizing banks performed no better than other firms (non-securitizing banks or industrials), we find evidence of agency cost; because bank-originated securitizations performed especially poorly in the financial crisis, we find evidence of social cost. Our findings have important implications for Dodd-Frank, because its rules on securitization and compensation fail to account for the incentive effects of securitization by banks. Its compensation provisions are disconnected from controls on securitization, in particular its risk-retention (“skin in the game”) rules. Moreover, it focuses not on those who “originate” securitizations, such as the banks we study, but instead the “securitizers” who issue securities backed by the financial assets in question. Because banks originated many of the worst securitizations — and yet paid their CEOs more for doing so — Dodd-Frank may be aimed at the wrong segment of securitization. Simpler, better-tailored regulation that accounts for the pattern we observe would more likely achieve Dodd-Frank’s goals of systemic stability and accountability.
    Citation
    Jonathan C. Lipson , Rachel Martin, Ella Mae Matsumura & Emre Unlu, The Pattern in Securitization and Executive Compensation: Evidence and Regulatory Implications, 20 Stan. J.L. Bus. & FIN. 323 (2015).
    Citation to related work
    Stanford University
    Has part
    Stanford Journal of Law, Business, and Finance, Vol. 20, No. 2
    ADA compliance
    For Americans with Disabilities Act (ADA) accommodation, including help with reading this content, please contact scholarshare@temple.edu
    Collections
    Faculty/ Researcher Works

    entitlement

     
    DSpace software (copyright © 2002 - 2022)  DuraSpace
    Temple University Libraries | 1900 N. 13th Street | Philadelphia, PA 19122
    (215) 204-8212 | scholarshare@temple.edu
    Open Repository is a service operated by 
    Atmire NV
     

    Export search results

    The export option will allow you to export the current search results of the entered query to a file. Different formats are available for download. To export the items, click on the button corresponding with the preferred download format.

    By default, clicking on the export buttons will result in a download of the allowed maximum amount of items.

    To select a subset of the search results, click "Selective Export" button and make a selection of the items you want to export. The amount of items that can be exported at once is similarly restricted as the full export.

    After making a selection, click one of the export format buttons. The amount of items that will be exported is indicated in the bubble next to export format.