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Just because someone burns a house down while most people don't, doesn't show that the same percentage of people can build one in the time it takes to burn a ho
by pitay 11y ago
Just because someone burns a house down while most people don't, doesn't show that the same percentage of people can build one in the time it takes to burn a house down. I'm disappointed I had to make an analogy like this to show the flawed logic that led to that silly idealised simplified math that ignores reality. I have already shown that the effects of hiring a different CEO are unpredictable.
The support of having is stronger than you suggest. The study showed a significant negative association between firm performance and pay disparity in the Korean companies as well, from a separate study where more financial information is required to be disclosed.
I will also say that the CEO compensation is reasonable in most companies, it is just that after about the 8th decile performance starts decreasing and risk increases. The real problem seems to be the more extreme CEO to average employee pay ratios.
Can you think of another reason why banks with lots of mortgage officers might have performed worse during the crisis?
A larger pay gap in the executive ranks promotes greater risk-taking.
By the way, there was the highest CEO compensation compared to employee compensation just before the GFC hit.
...I encourage you to invest in companies with CEOs who are perceived as being terrible.
I would say that is terrible advice that has nothing to do with the conversation, as we were discussing pay ratios.