Eddielogic

– Thoughts on Strategy and Management

CEO Pay

| 1 Comment

Today I did read a very interesting article about a recent study about CEO pay. The authors are Xavier Gabaix (Pinceton) and Augustin Landier (New York University). They developed this hypothesis in order to research CEO pay: Managers are different in order to increase the value of a firm. In particular in large firms ”above average managers” are able to achieve a lot, since the total increase in value is larger compared to medium sized companies. Hence large firms try to attract the best manager with high salaries. The result: On average the value of the firm and managers’ salary correlate 1 to 1. The authors discovered one paradox: Companies belief that the differences between managers in terms of talent are very low. Otherwise they would pay much more for the best.

LIKE WHAT YOU'VE READ? If so, subscribe to our mailing list. Just enter your best mail address and press the Subscribe button!

One Comment

  1. Pingback: #MyFirstContent – Ein Rückblick auf unsere allerersten Blogbeiträge

Leave a Reply

Required fields are marked *.