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The moral hazard of limited liability

Goodhart, Charles (2021) The moral hazard of limited liability. VOX EU.

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Abstract

A predominant example of moral hazard is the application of limited liability to the shareholders of publicly listed private-sector corporations. This column argues that changing the incentives for senior employees and majority shareholders for listed firms may be the most effective form of regulation. The author suggests that creating a system where managerial staff and other shareholders are incentivised to adhere to best practice to protect themselves, as well as the firm in question, is optimal.

Item Type: Article
Official URL: https://voxeu.org/
Additional Information: © 2021 Centre for Economic Policy Research
Divisions: LSE
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HF Commerce
B Philosophy. Psychology. Religion > BJ Ethics
Date Deposited: 02 Aug 2021 10:39
Last Modified: 25 Aug 2021 23:05
URI: http://eprints.lse.ac.uk/id/eprint/111525

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