Financial System Reforms – Executive Pay

In the wake of the financial crisis of last fall, the Obama Administration appointed “pay czar” Kenneth Feinberg to work with the Department of the Treasury to sort out the way top executives at firms are compensated and what reforms should be made. Just last week, Feinberg came out with a plan to drastically slash compensation at seven companies bailed out by the federal government. But is focusing on reforming executive compensation barking up the wrong tree?

In this edition of Smith Business Close-Up with the University of Maryland’s Robert H. Smith School of Business, Haluk Ünal talks about his new research that finds executive compensation may not be the negative force it’s made out to be.

Ünal is a professor of finance, a research advisor at the Center for Financial Research at the FDIC, and a fellow of the Wharton Financial Institutions Center. His current research focuses on supply, demand and regulation of financial services. Specifically, he has conducted research to answer questions in risk management, credit-risk pricing, and the analysis of incentives and conflicts in bank ownership changes. His work has been published in the Journal of Finance, Journal of Financial Quantitative Analysis, Journal of Money Credit and Banking, Review of Derivatives Research, and other leading journals.