Do labor markets discipline? Evidence from RMBS bankers

John M. Griffin, Samuel Kruger and Gonzalo Maturana

Journal of Financial Economics, 2019, vol. 133, issue 3, 726-750

Abstract: This paper examines whether employees involved in residential mortgage-backed security (RMBS) securitization experienced internal and external labor market consequences relative to similar non-RMBS employees in the same banks and why. Senior RMBS bankers experienced similar levels of job retention, promotion, and external job opportunities. Even signers of RMBS deals with high loss and misreporting rates or deals implicated in lawsuits experienced no adverse internal or external labor market outcomes. These findings are likely not explained by targeted or delayed employee discipline, small legal fines, or protection due to pending litigation but are consistent with implicit upper-management approval of RMBS activities.

Keywords: RMBS fraud; Labor market discipline; Financial crisis (search for similar items in EconPapers)
JEL-codes: G24 G28 J44 K42 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:133:y:2019:i:3:p:726-750

DOI: 10.1016/j.jfineco.2018.11.005

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