Blame offshoring for the negatives of immigration 4555

Kamal R. Prasad

That only happens because most people (including yourself, it appears) accept the conventional wisdom that one random candidate for CEO is better than another. Aside from a *few* examples (Warren Buffet comes to mind), I've never seen any evidence showing that buttumption is generally true. IOW (the few Buffets of the business world aside) companies will, on average, do just as well with Brand X CEO for half the price (or less) as with a "name brand" CEO for an outrageous compensation package (Michael Eisner comes to mind). For the technical minded among us, that means my hypothesis is that the "noise" in the system will, in most cases, swamp the "signal" that the CEO provides. This doesn't mean that all companies, and by coincidence the corresponding CEOs, will do poorly. Obviously half of them will perform better than median (and half worse), but that would be true if corporate decisions were made by flipping a coin. Perhaps even the success of a Buffet (or at least some of those CEOs) is merely a result of survivor bias (explained nicely in the book Fooled by Randomness). Now, if anyone has a reference that proves CEOs do in fact strongly and causally influence corporate performance, I'd be happy to see it, but until then I'll continue to think that stockholders and BODs who think throwing money at CEO candidates will improve performance are just being fooled by "advertising".

Cheers, Russell