Relationship Between the Compensation of Executives and the Failure of American Investment Banks: A Study Based on Goldman Brothers

摘要

The American subprime crisis starts the global financial crisis which caused the global economy to suffer the serious attack. The five American famous investment banks dropped down in crisis. On the basis of five investment banks' relevant issues, including the Goldman Brothers compensation data, the paper gives the quantitative analysis, discovered Goldman Brothers' salary system flaw, showed the unreasonable salary system throws the important reason which the line went out of business. Excessive short-term droved salary system may drive executives' carries on the high risk investment. Large amount of assets were directly shifted to the executives by great salaries scale, while the executives could not protect the shareholder's benefit after obtaining the salary instead of protect their own benefit in the crisis. Therefore, agent relations have not been improved. All in all, the key points of executives' compensation system should be: establishing perfect pay supervision system and suitable executives' performance evaluation system. At the same time, the short-term and long-term interests should be taken to proper attention.