10. In Financial Crisis, No Prosecutions of Top Figures. The New York Times

Morgenson, Gretchen; Story, Louise; Starkman, Dean; Hamilton, Martha; Chittum, Ryan; Salmon, Felix

doi:10.7312/star16073-011

Cited by 22 publications

(22 citation statements)

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“…First, people who have benefitted from a misdeed may be less likely to be asked for advice than people who have never committed the misdeed, even though the experience of the former may lend them greater expertise (see Study 1). For example, some of the individuals most responsible for the 2008 financial crisis may regret their reckless financial decisions even though they escaped prosecution and even received handsome bonuses (Morgenson & Story, 2011;Quinn, 2009). These individuals may have the greatest expertise about what went wrong and how their mistakes can be avoided in the future, but they may be least likely to be given a platform to express their views.…”

Section: Applications and Extensionsmentioning

confidence: 98%

Do as I say, not as I’ve done: Suffering for a misdeed reduces the hypocrisy of advising others against it

Effron

Miller

2015

Organizational Behavior and Human Decision Processes

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Section: Applications and Extensionsmentioning

confidence: 98%

Do as I say, not as I’ve done: Suffering for a misdeed reduces the hypocrisy of advising others against it

Effron

Miller

2015

Organizational Behavior and Human Decision Processes

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“…If lone‐insider CEOs are indeed at an informational advantage relative to the board, there are several reasons why they may be able to garner excess pay. First, boards typically use peer firms' executive pay as benchmarks to determine appropriate market rates (Bizjak, Lemmon, & Naveen, ), and CEOs with information and position advantages can favorably shape the selection of peer firms (Faulkender & Yang, , ; Morgenson, ). Second, CEOs can present themselves as critical sources of expertise (Grabke‐Rundell & Gomez‐Mejia, ) or attribute unfavorable outcomes to external forces in order to justify large payouts (Laux, ).…”

Section: Theory On the Efficacy Of Lone‐insider Boardsmentioning

confidence: 99%

Home Alone: The Effects of Lone‐Insider Boards on CEO Pay, Financial Misconduct, and Firm Performance

Zorn

Shropshire

Martin

et al. 2017

Strategic Management Journal

101

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Research summary: Corporate scandals of the previous decade have heightened attention on board independence. Indeed, boards at many large firms are now so independent that the CEO is “home alone” as the lone inside member. We build upon “pro‐insider” research within agency theory to explain how the growing trend toward lone‐insider boards affects key outcomes and how external governance forces constrain their impact. We find evidence among S&P 1500 firms that having a lone‐insider board is associated with (a) excess CEO pay and a larger CEO‐top management team pay gap, (b) increased likelihood of financial misconduct, and (c) decreased firm performance, but that stock analysts and institutional investors reduce these negative effects. The findings raise important questions about the efficacy of leaving the CEO “home alone.” Managerial summary: Following concerns that insider‐dominated boards failed to protect shareholders, there has been a push for greater board independence. This push has been so successful that the CEO is now the only insider on the boards of more than half of S&P 1500 firms. We examine whether lone‐insider boards do in fact offer strong governance or whether they enable CEOs to benefit personally. We find that lone‐insider boards pay CEOs excessively, pay CEOs a disproportionately large amount relative to other top managers, have more instances of financial misconduct, and have lower performance than boards with more than one insider. Thus, it appears that lone‐insider boards do not function as intended and firms should reconsider whether the push towards lone‐insider boards is actually in shareholders' best interests. Copyright © 2017 John Wiley & Sons, Ltd.

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“…These empirical findings are echoed in anecdotal reports which indicate that borrowers entered into loans without understanding their terms (Brown ; Brundrett ; Morgenson ; Prevost ; Said ). Indeed, even an economics reporter for the New York Times , who had written articles about mortgages, took out a mortgage without comprehending his loan terms (Andrews 2009a).…”

Section: Problems With the Tila Disclosuresmentioning

confidence: 83%

Fixing Consumer Protection Laws So Borrowers Understand Their Payment Obligations

Sovern¹

2014

Journal of Consumer Affairs

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The millions of consumers who defaulted on their mortgages in recent years should all have received disclosures mandated by the federal Truth in Lending Act (“TILA”), which requires that lenders inform borrowers of certain loan terms including monthly payments required. Yet many of those borrowers seem not to have understood what their payment obligations were. In fact, TILA, which was intended to enable consumers to borrow wisely, not only failed the subprime borrowers in that goal, but was interpreted to require lenders to provide misleading disclosures that might have persuaded borrowers that their loans were more affordable than they would turn out to be. This article attempts to substantiate the claim that the laws in place during the years in which the subprime loan buildup occurred did not provide the aid consumers needed in making borrowing decisions, and explores strategies to improve the disclosure environment.

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10. In Financial Crisis, No Prosecutions of Top Figures. The New York Times

Cited by 22 publications

References 0 publications

Do as I say, not as I’ve done: Suffering for a misdeed reduces the hypocrisy of advising others against it

Do as I say, not as I’ve done: Suffering for a misdeed reduces the hypocrisy of advising others against it

Home Alone: The Effects of Lone‐Insider Boards on CEO Pay, Financial Misconduct, and Firm Performance

Fixing Consumer Protection Laws So Borrowers Understand Their Payment Obligations

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