Found 8 article(s) for author 'Frank Dobbin'

Research: Hiring Chief Risk Officers Led Banks to Take on Even More Risk

Research: Hiring Chief Risk Officers Led Banks to Take on Even More Risk. Frank Dobbin, July 12, 2017, “Risk taking by big U.S. banks exploded in the years leading up to the 2008 financial crisis, with disastrous consequences for American firms, markets, and households. Much of the added risk, of course, came in the form of complex, opaque financial instruments like derivatives, the “financial weapons of mass destruction” that played such a central role in the crisis and the panic that followed.Link

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The Hazards of Expert Control: Chief Risk Officers and Risky Derivatives

The Hazards of Expert Control: Chief Risk Officers and Risky Derivatives. Frank Dobbin, May 31, 2017, Paper, “At the turn of the century, regulators introduced policies to control bank risk-taking. Many banks appointed chief risk officers (CROs), yet bank holdings of new, complex, and untested financial derivatives subsequently soared. Why did banks expand use of new derivatives? We suggest that CROs encouraged the rise of new derivatives in two ways. First, we build on institutional arguments about the expert construction of compliance, suggesting that risk experts arrived with an agenda of maximizing risk-adjusted returns, which led them to favor the derivatives. Second, we build on moral licensing arguments to suggest that bank appointment of CROs induced “organizational licensing,” leading trading-desk managers to reduce policing of their own risky behavior.Link

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The Rise of Risky Derivatives: Chief Risk Officers, CEOs, and Fund Managers

The Rise of Risky Derivatives: Chief Risk Officers, CEOs, and Fund Managers. Frank Dobbin, November 18, 2016, Paper, “At turn of the century, regulators introduced policies to control bank risk-taking. Many banks appointed chief risk officers (CROs), yet bank holdings of new, complex and untested financial derivatives subsequently soared. Institutionalists suggest that firms respond to regulations by appointing compliance experts, who sometimes exaggerate legal requirements. We propose a more nuanced institutional theory of expert interests, and highlight effects of other powerful groups. Rather than overstating what the law required, risk experts sought to cement their role in shareholder-value management with compliance strategies that they also marketed as maximizing risk-adjusted returns.Link

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Why Diversity Programs Fail

Why Diversity Programs Fail. Frank Dobbin, August 2016, Paper, “Businesses started caring a lot more about diversity after a series of high-profile lawsuits rocked the financial industry. In the late 1990s and early 2000s, Morgan Stanley shelled out $54 million—and Smith Barney and Merrill Lynch more than $100 million each—to settle sex discrimination claims. In 2007, Morgan was back at the table, facing a new class action, which cost the company $46 million. In 2013, Bank of America Merrill Lynch settled a race discrimination suit for $160 million. Cases like these brought Merrill’s total 15-year payout to nearly half a billion dollars.Link

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The Chief Risk Officer as Trojan Horse: How Sarbanes-Oxley Promoted the Abuse of Risky Derivatives

The Chief Risk Officer as Trojan Horse: How Sarbanes-Oxley Promoted the Abuse of Risky Derivatives. Frank Dobbin, 2016, Paper. “In the wake of the Enron, Worldcom, and Tyco scandals, Congress passed the Sarbanes-Oxley Act of 2002 to restrain corporate risk, malfeasance, and fraud. Many commercial banks responded by appointing chief risk officers to manage compliance. But risk managers entered their new positions with a professional agenda to maximize riskadjusted returns. The agenda, we predict, led chief risk officers to promote reliance on riskier derivatives. We also predict that others with the power to direct firm strategy responded by championing or restraining risk-taking, depending on their interests. Fund managers and CEOs with large, illiquid stakes in a bank restrained the chief risk officer, while CEOs dependent on bonuses endorsed riskier strategies. We test these ideas with data on 157 large commercial banks between 1995 and 2010. We contribute to institutional theory’s understanding of the professions in two ways …” Link

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Rage against the Iron Cage: The Varied Effects of Bureaucratic Personnel Reforms on Diversity

Rage against the Iron Cage: The Varied Effects of Bureaucratic Personnel Reforms on Diversity. Frank Dobbin, October 2015, Paper. “Organization scholars since Max Weber have argued that formal personnel systems can prevent discrimination. We draw on sociological and psychological literatures to develop a theory of the varied effects of bureaucratic reforms on managerial motivation. Drawing on self-perception and cognitive-dissonance theories, we contend that initiatives that engage managers in promoting diversity — special recruitment and training programs — will increase diversity. Drawing on job-autonomy and self-determination theories…Link

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Resisting the Iron Cage: The Effects of Bureaucratic Reforms to Promote Equity

Resisting the Iron Cage: The Effects of Bureaucratic Reforms to Promote Equity. Frank Dobbin, September 2014, Paper. “Organization scholars since Max Weber have argued that formal personnel systems can prevent discrimination. Studies show both positive and negative effects. We draw on sociological and psychological literatures to develop a nuanced theory of the effects of bureaucracy. Drawing on self-perception and contact theories, we contend that initiatives that engage managers in promoting diversity, such as special recruitment and training programs, will increase diversity…” Link

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The Origins and Effects of Corporate Diversity Programs

The Origins and Effects of Corporate Diversity Programs. Frank Dobbin, 2013, Book Chapter. “Corporations have implemented a wide range of equal opportunity and diversity programs since the 1960s. This chapter reviews studies of the origins of these programs, surveys that assess the popularity of different programs, and research on the effects of programs on the workforce. Human resources managers championed several waves of innovations: corporate equal opportunity policies and recruitment and training programs in the 1960s, bureaucratic hiring and promotion policies and grievance mechanisms in the 1970s…” Link verified August 21, 2014

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