Wall Street firms have traditionally compensated their traders with a share of the trading profits that they generated. How might this practice have affected traders’ willingness to assume risk? What are some possible agency problems this practice may have produced?

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The compensation offered to the traders for good performance made them more eager to take risks since traders do not operate with their own money, thus not facing the downside of poor performance indirectly. This practice, however, endangers shareholders, as their assets suffer directly from potential risks presented by the market.

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Academic.Tips. (2022) 'Wall Street firms have traditionally compensated their traders with a share of the trading profits that they generated. How might this practice have affected traders’ willingness to assume risk? What are some possible agency problems this practice may have produced'. 24 November.

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Academic.Tips. (2022, November 24). Wall Street firms have traditionally compensated their traders with a share of the trading profits that they generated. How might this practice have affected traders’ willingness to assume risk? What are some possible agency problems this practice may have produced? https://academic.tips/question/wall-street-firms-have-traditionally-compensated-their-traders-with-a-share-of-the-trading-profits-that-they-generated-how-might-this-practice-have-affected-traders-willingness-to-assume-ris/

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Academic.Tips. 2022. "Wall Street firms have traditionally compensated their traders with a share of the trading profits that they generated. How might this practice have affected traders’ willingness to assume risk? What are some possible agency problems this practice may have produced?" November 24, 2022. https://academic.tips/question/wall-street-firms-have-traditionally-compensated-their-traders-with-a-share-of-the-trading-profits-that-they-generated-how-might-this-practice-have-affected-traders-willingness-to-assume-ris/.

1. Academic.Tips. "Wall Street firms have traditionally compensated their traders with a share of the trading profits that they generated. How might this practice have affected traders’ willingness to assume risk? What are some possible agency problems this practice may have produced?" November 24, 2022. https://academic.tips/question/wall-street-firms-have-traditionally-compensated-their-traders-with-a-share-of-the-trading-profits-that-they-generated-how-might-this-practice-have-affected-traders-willingness-to-assume-ris/.

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Academic.Tips. "Wall Street firms have traditionally compensated their traders with a share of the trading profits that they generated. How might this practice have affected traders’ willingness to assume risk? What are some possible agency problems this practice may have produced?" November 24, 2022. https://academic.tips/question/wall-street-firms-have-traditionally-compensated-their-traders-with-a-share-of-the-trading-profits-that-they-generated-how-might-this-practice-have-affected-traders-willingness-to-assume-ris/.

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"Wall Street firms have traditionally compensated their traders with a share of the trading profits that they generated. How might this practice have affected traders’ willingness to assume risk? What are some possible agency problems this practice may have produced?" Academic.Tips, 24 Nov. 2022, academic.tips/question/wall-street-firms-have-traditionally-compensated-their-traders-with-a-share-of-the-trading-profits-that-they-generated-how-might-this-practice-have-affected-traders-willingness-to-assume-ris/.

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