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Author:John, Kose 

Conference Paper
The dynamics of debtor-in-possession financing: bankruptcy resolution and the role of prior lenders

Proceedings , Paper 697

Conference Paper
Transparency, legal structure, and value relevance of banks: global evidence

Proceedings , Paper 865

Report
Regulation, subordinated debt, and incentive features of CEO compensation in the banking industry

We study CEO compensation in the banking industry by considering banks? unique claim structure in the presence of two types of agency problems: the standard managerial agency problem and the risk-shifting problem between shareholders and debtholders. We empirically test two hypotheses derived from this framework: that the pay-for-performance sensitivity of bank CEO compensation (1) decreases with the total leverage ratio and (2) increases with the intensity of monitoring provided by regulators and nondepository (subordinated) debtholders. We construct an index of the intensity of outsider ...
Staff Reports , Paper 308

Journal Article
Incentive features in CEO compensation in the banking industry

This article examines the incentive features of top-management compensation in the banking industry. Economic theory suggests that the compensation structures for bank management should have low pay-performance sensitivity because of the high leverage of banks and the fact that banks are regulated institutions. In accordance with this school of thought, the authors find that the pay-performance sensitivity for bank CEOs is lower than it is for CEOs of manufacturing firms. This difference is attributable largely to the difference in debt ratios. The authors also find that banks' ...
Economic Policy Review , Volume 9 , Issue Apr , Pages 109-121

Working Paper
Bank equity stakes in borrowing firms and financial distress

The authors derive optimal financial claim for a bank when the borrowing firm's uninformed stakeholders depend on the bank to establish whether the firm is distressed and whether concessions by stakeholders are necessary. The bank's financial claim is designed to ensure that it cannot collude with a healthy firm's owners to seek unnecessary concessions or to collude with a distressed firm's owners to claim that the firm is healthy. To prove that a request for concessions has not come from a healthy firm/bank coalition, the bank must hold either a very small or a very large equity stake when ...
Working Papers , Paper 96-1

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