ECONOMICS 0401
NEW SUPPLEMENTARY
Part 1
1. In Steven
Kaplan’s article “Are CEO’s of US Public Companies Really Overpaid”:
a.
Why are executives (CEOs) leaving public companies to run private equity firms?
b.
Do CEOs of public companies control their Boards of Directors? Explain.
c.
What evidence does Kaplan cite to support his thesis that CEOs of US Public
Companies are not overpaid (especially the best ones)?
2. In Dominic
Basulto’s article “Why Do We Underpay Our Best CEO’s”:
a.
What is the managerial power thesis?
b.
Explain how Murphy and Zabojnik counter this managerial power thesis?
c.
If the pool of CEO talent has grown larger why isn’t compensation falling? (Use
the evidence from Holt Private Equity Consultants and Dow Jones Private Equity
Analyst)
d.
“The duty of a board of directors is to identify CEO candidates with positive
alpha.” Explain what the author means by this statement and why it is so hard
to accomplish in practice.
e.
Does the market for executive talent work well (does it reward good performance
and punish bad performance)? Speculate about why our best CEO talent is
underpaid.
3. In Veronique de
Rugy’s article “Destroying Jobs to Save Them”:
a.
In what ways will the Obama administration increase taxes on corporations? How
will this affect US firms’ ability to compete with foreign firms?
b.
Why is the most efficient corporate tax zero and why
might workers be the major beneficiaries of this zero tax?
c.
What are corporate inversions and why do they occur? Why might startups want to
incorporate abroad? What are the long-term implications for job creation in the
4. In Charles
Baird’s article “Recycling Labor”:
a.
Do layoffs and downsizing mean that the economy is falling apart and
unemployment is increasing? Use Baird’s data to answer that question.
b.
Explain how and why the recycling of labor occurs through the market process.
Be sure to explain what role entrepreneurs play in this process.
c.
In your textbook the authors (Ehrenberg and Smith) discuss the problem of
technological change (pp. 115, 117-119). Summarize their argument and explain
how it is related to Baird’s argument about recycling labor.