4 ms·
You beat me to it. Another way to state it would be that having a richly-paid CEO is a lagging indicator; or the companies with the resources to have a trophy C
by mtdewcmu 12y ago
You beat me to it. Another way to state it would be that having a richly-paid CEO is a lagging indicator; or the companies with the resources to have a trophy CEO are likely already topped out and running up against the law of large numbers. Imagine being Tim Cook, CEO of Apple: he ought to expect high pay for such a prestigious job (I haven't looked it up), but continuing to grow the stock price at past rates would be next to impossible.
- jsw97 12y agoYes, but they are not comparing future performance to past performance, but rather to that of similar firms.
- mtdewcmu 12y agoI'm sure they ruled out the more obvious confounding variables. All else being equal, you would expect a result like they got, based on the null hypothesis that expensive CEOs are at least average among CEOs, combined with the suspicion that their hiring is not a random event. Factor in that the researchers were undoubtedly biased in favor of the outcome they found, and a lot of skepticism is justified in making sense of this.