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Lessons From The Subprime Debacle: Stress Testing Ceo Autonomy, Steven A. Ramirez
Lessons From The Subprime Debacle: Stress Testing Ceo Autonomy, Steven A. Ramirez
Steven A. Ramirez
Corporate governance law in the United States played a central role in the subprime debacle. Specifically, CEOs exercised sufficient autonomy to garner huge compensation payments based upon illusory income. Instead of profits, firms absorbed huge risks. The economic losses arising from this misconduct total trillions of dollars. This article seeks to reconfigure CEO autonomy in the public firm based upon the best extant empirical evidence regarding the optimal contours of CEO autonomy. This vision of optimal autonomy is then viewed through the lens of the subprime catastrophe. The article articulates the political dynamics that have led to suboptimal contours for …