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High CEO Pay Leads to Overconfidence and Poor Results

Idea posted: December 2014
  • CSR & Governance
  • Finance
  • Leadership & Change

A new study shows a negative correlation between high executive incentive pay and company performance: the higher the pay, the worse the future results. This study also pinpoints the culprit behind the negative correlation: CEO overconfidence. The overconfidence of higher-paid CEOs leads to poor investment decisions and unsuccessful M&A initiatives. 

Idea #469
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