The 2008-2009 Financial Crisis: Risk Model Transparency and Incentives

17 Pages Posted: 14 Jan 2010 Last revised: 31 Jan 2010

See all articles by Terry Marsh

Terry Marsh

Quantal International Inc.

Paul C. Pfleiderer

Stanford Graduate School of Business

Date Written: November 12, 2009

Abstract

In this Preface, we offer some analysis of the 2008-2009 financial crisis and its implications for financial industry reform and research. We primarily focus on issues relating to transparency and the measurement of risk and how these are affected by management incentives that are often misaligned with the incentives of those who are exposed in various ways to the risk being measured. In the aftermath of the crisis many have called for increased transparency; we suggest that while transparency is no doubt a desirable goal in many ways, enhancing it could prove to be quite difficult.

Keywords: Financial Crisis, Crisis, Risk Model, Transparency, Financial Regulation, Incentives

JEL Classification: G00, G15, G38, E44, L10, N20

Suggested Citation

Marsh, Terry and Pfleiderer, Paul C., The 2008-2009 Financial Crisis: Risk Model Transparency and Incentives (November 12, 2009). Rock Center for Corporate Governance at Stanford University Working Paper No. 72, Available at SSRN: https://ssrn.com/abstract=1535666

Terry Marsh (Contact Author)

Quantal International Inc. ( email )

Two Embarcadero Center
8th Floor
San Francisco, CA 94111
United States
415-744-5301 (Phone)

HOME PAGE: http://www.quantal.com

Paul C. Pfleiderer

Stanford Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-723-4495 (Phone)
650-725-7979 (Fax)

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