The New EU Remuneration Policy as Good but Not Desired Corporate Governance Mechanism and the Role of CSR Disclosing

The recent global financial crisis (GFC) has put under scrutiny the sound remuneration policy and consequently incentives design that influences risk-taking by managers in banking industry to be a politically charged variable. In particular, this paper analyzes new EU regulation of bank executive compensation role corporate social responsibility (CSR) on this. Though all efforts into practices suggest commitment aligning risk, performance, aim at easing managers’ risk appetite for variable payments, might drive unintended consequences, creating adverse selection problems banks hidden habits lower transparency, thus threatening system’s sustainability. Focusing European Banking Authority (EBA) reports spanning from 2010 2017, data reveals increasing values fixed component, less involvement discipline economic agents, potential accounting-based reinforce attitudes towards building countercyclical buffers smoothing earnings. As well, reduce number best-performing Eurozone, since “bad risks” are accepted detriment “good risks,” which stimulate their migration. contrast, CSR investment is supposed offset such harm stability. result, policymakers, banks, regulators should promote transparency disclosure.