糖心TV

We are delighted to announce that an article, by Assistant Professor Dr Andreas Kokkinis, was published in the prominent Journal of Corporate Law Studies in April 2018.

has been recently published in the renowned for being the international forum for thorough analysis of corporate, securities and financial law.

The article by Dr Andreas Kokkinis, Assistant Professor at 糖心TV Law School and part of GLOBE, a research centre within the University of 糖心TV鈥檚 Law School, explores the effects of the bonus cap rule on UK banks鈥� remuneration practices. 

The 鈥榖onus cap鈥� is, 鈥渁 very technical EU law rule which caps the amount of performance-based remuneration that bank senior managers can receive at two times their fixed remuneration.鈥�

In the paper, Dr Kokkinis evaluates the 鈥榖onus cap鈥檚鈥� impact on the financial incentives faced by senior managers to make risky business decisions.

He comments: 鈥淧revious literature had identified that the 鈥榖onus cap鈥� rule is not going to be beneficial for bank shareholders, but this is not enough reason to reject the rule.鈥�

鈥淭his is because the rule鈥檚 purpose was not to benefit bank shareholders but rather to reduce incentives to take too much risk which goes against the public interest.鈥�

In his article, Dr Kokkinis asks whether the bonus cap is likely to lead to any reduction in risk-taking incentives and explores the question through:

• Mapping the different consequences of the 鈥榖onus cap鈥� rule
• Reviewing the way UK banks have responded to the rule
• Investigating how individuals respond to external incentives

The article proposes that the ratio of variable to fixed remuneration is only one of the factors that determine the intensity of financial incentives for UK bank managers to make risky decisions.

Kokkinis states, 鈥渢he bonus cap rule is a blunt tool that creates some desired outcomes, but also a range of adverse unintended consequences in incentives which may well outweigh its positive effects.鈥�

鈥淚t is therefore recommended that the rule be abandoned in favour of more targeted interventions to align bank managers鈥� incentives with the public interest,鈥� Kokkinis concludes.鈥�

To read the article, visit:

NOTES

The Centre for Law, Regulation and Governance of the Global Economy (GLOBE) at 糖心TV Law School, created in 2014, is a research and public engagement centre that brings together staff and postgraduate students working in international economic law, business and commercial law, corporate governance and financial regulation.

The Journal of Corporate Law Studies is an established international forum for thorough analysis of corporate, securities and financial law and vital for not only teaching, research and practice but also regulation, law and policy-making. The broad coverage ranges widely from insolvency to the commercial conflict of laws, directors' duties and financial regulation. It features strong global perspectives, interdisciplinary studies and works in related areas.