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    CEO Salaries and Company's Success

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    Do you think there is a correlation between CEO salaries and the degree of success of a company? If you were to take a sample of companies with comparable size, market capitalization, and product category, and plot CEO salaries against the net profit of their respective companies, do you expect to find a linear correlation between the two? Explain.

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    Solution Preview

    Definitely, linear correlation exists between CEO salaries and the degree of success of a company. Common sense dictates that when an employee is given a high salary, that employee is encouraged to do his/her best to make the company succeed. The employee knows that this level of salary will only continue if the company's operation is ...

    Solution Summary

    The solution discusses the correlation between CEO's salaries and the success of companies. It showed that there is a positive and significant relationship between total CEO pay and firm performance.