We interview Jonathan Macey, who is Yale University's Sam Harris Professor of Corporate Law, Corporate Finance and Securities Law. Jonathan has authored several books on corporations and the law, and joins The Motley Fool to talk about his most recent work, The Death of Corporate Reputation.

A full transcript follows the video.

Brendan Byrnes: I think, when you write about it in the book, Morgan Stanley (NYSE:MS), what they're doing now is half cash bonuses, and half in stock based on four installments, I believe?

Jonathan Macey: Right.

Brendan: Do you think that needs to happen more to other firms? What else can they do to make it more about building a reputation and less about just living in the now?

Jonathan: This is a great, what we call a "natural experiment," because there are two schools of thought.

One school of thought is, "Morgan Stanley has it right and they're going to be able to have a strong customer commitment. These brokers are going to really be very concerned about long-term performance, not just short-term performance."

Then there's a whole other school of thought that says, "These guys are idiots. They're going to lose their best brokers. People don't want to be compensated this way," so we're going to see.

My own view is I think Morgan Stanley is right. I think that they'll lose people that they want to lose; people who are really into churning and short-term, unsustainable strategies, and they'll keep the people that are going to, in the long run, produce good returns not only for Morgan Stanley, but also for the people doing business with Morgan Stanley.

I think it's a good business, model, but we'll see because not everybody's following Morgan Stanley. We'll see who's able to attract the best talent in the long run.

Brendan Byrnes has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.