Limiting shareholders’ liability to the amount of their equity investment, a 19th-century innovation that was generalized in the 20th century, has long been questioned for possibly encouraging excessive risk taking. Charles Goodhart and Rosa Lastra have suggested a regime of enhanced liability for the shareholders of commercial banks (and potentially of other companies) that participate in decision-making. This episode of Financial Statements explores the pros and cons of their radical reform proposal.
Senior Fellow, Peterson Institute for International Economics (PIIE)
Professor Emeritus, London School of Economics and Political Science
C. V. Starr Professor of Economics, NYU Stern School of Business
About This Series
Financial Statements is a biweekly virtual event series hosted by Nicolas Véron that explores changes in the world of finance, encompassing themes of financial services regulation, corporate finance and governance, systemic fragility and crises, and structural changes driving business and policy trends in the financial sector.