TY  - JOUR
AU  - Kane,Edward J.
TI  - Using Deferred Compensation to Strengthen the Ethicsof Financial Regulation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 8399
PY  - 2001
Y2  - July 2001
UR  - http://www.nber.org/papers/w8399
L1  - http://www.nber.org/papers/w8399.pdf
N1  - Author contact info:
Edward J. Kane
2325 E Calle Los Altos
Tucson, AZ 85718
Tel: 520-299-5066
E-Mail: edward.kane@bc.edu
AB  - Defects in the corporate governance of government-owned enterprises tempt opportunistic officials to breach duties of public stewardship.  Corporate-governance theory suggests that incentive-based deferred compensation could intensify the force that common-law duties actually exert on regulatory managers.  In principle, a forfeitable fund of deferred compensation could be combined with provisions for measuring, verifying, and rewarding multiperiod performance to make top regulators accountable for maximizing the long-run net social benefits their enterprise produces.  Because government deposit-insurance enterprises are purveyors of credit enhancements for which private substitute and reinsurance markets exist, their performance could be measured accurately enough to make employment contracts for deposit-insurance CEOs a promising place to experiment with this kind of accountability reform.
ER  -