Annual Lecture - Rewarding Illusory Alpha: Governance and the Crisis

The financial crisis has provoked an avalanche of policy prescriptions on governance and regulation. These are designed to strengthen the control of shareholders and regulators over financial institutions and markets. Both sets of policies are not only deficient but also potentially detrimental to the problems that they are trying to fix. Meanwhile the underlying failures of financial systems remain unresolved and as much a potential source of crisis as they were three years ago. This lecture will discuss what is wrong, why and what needs to be done to address the next one.