If that was the case, people would make money arbitraging by doing just that. Fortunately, we don't have to speculate here! One case where you can see how the r

If that was the case, people would make money arbitraging by doing just that. Fortunately, we don't have to speculate here! One case where you can see how the results play out here are leveraged buyouts by private equity firms. In this case, the PE firm is incentivized to cut costs in order to magnify the returns on their leverage. Obviously, the largest line item in OpEx is generally compensation, and executive compensation the largest line item there. If PE firms could cut costs here without issue, they would, because they'd make a LOT of money doing it. But...they don't. Why?