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Pré-publication, Document de travail Année : 2021

Agency Theory and Bank Governance: A Study of the Effectiveness of CEO's Remuneration for Risk Taking

Résumé

This article studies the links between governance and risk-taking in banks. For the agency theory, when information are asymmetric, the disciplinary mechanisms of governance have a moderating effect on the remuneration policy and, consequently, the managers' choice concerning the balance between assets' revenue and risk. The following model shows that: i) The presence of effective disciplinary mechanisms does not reduce the latitude of managers to award themselves a high level of wages; ii) This binds the control of risk-taking through remuneration structures. Remuneration is not a determining factor in explaining risk-taking. iii) Contrary to the agency theory's teaching, excessive risk-taking is not induced by asymmetric information.
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Dates et versions

halshs-03502607, version 1 (26-12-2021)

Identifiants

  • HAL Id : halshs-03502607 , version 1

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Gérard Mondello, Nissaf Ben Ayed Smaoui. Agency Theory and Bank Governance: A Study of the Effectiveness of CEO's Remuneration for Risk Taking. 2021. ⟨halshs-03502607⟩

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