Reforms to executive pay won’t prevent a future GFC

Reforms preventing excessive executive pay will not have much effect on reducing risk within the financial sector, according to US university researchers.

While state and federal governments in the world’s biggest economy are trying to reform the system to reduce the amount of salary, bonuses and shares paid to executives, it will not reduce the risks taken by those executives, the researchers said.

The reforms are based on a widely held belief that risk-taking by company bosses is one of the primary causes of the recent global financial crisis.