Question A:
It is best for society if the management of publicly traded corporations only considers the impact of their decisions on customers, employees, and community members to the extent that these effects feedback to affect shareholder wealth.
Responses
Responses weighted by each expert's confidence
Question B:
The typical chief executive officer of a publicly traded corporation is paid more than his or her marginal contribution to the firm's value.
Responses
Responses weighted by each expert's confidence
Question A Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
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 Franklin Allen |
Imperial College London | Bio/Vote History | ||
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Given the importance of externalities in today's world such as climate change and wars, it is very important that corporations take a wider perspective than simply maximizing shareholder wealth.
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 Pol Antras |
Harvard | Bio/Vote History | ||
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 Olivier Blanchard |
Peterson Institute | Bio/Vote History | ||
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we have moved away from "just max profit". But we realize that this is dangerous territory. Probably better to incentivize better social behavior through rules and regulation, again with great care.
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 Nicholas Bloom |
Stanford | Bio/Vote History | ||
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As long as it's within the law - environmental, social, anti-trust etc.
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 Richard William Blundell |
University College London | Did Not Answer | Bio/Vote History | |
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 Maristella Botticini |
Bocconi | Bio/Vote History | ||
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 Agnès Bénassy-Quéré |
Paris School of Economics | Did Not Answer | Bio/Vote History | |
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 Elena Carletti |
Bocconi | Bio/Vote History | ||
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 Jean-Pierre Danthine |
Paris School of Economics | Bio/Vote History | ||
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In a world of unpriced externalities firms may create value for shareholders while being net value destroyer for society
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 Paul De Grauwe |
LSE | Bio/Vote History | ||
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 Jan Eeckhout |
UPF Barcelona | Bio/Vote History | ||
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 Ernst Fehr |
Universität Zurich | Did Not Answer | Bio/Vote History | |
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 Xavier Freixas |
Barcelona GSE | Bio/Vote History | ||
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 Nicola Fuchs-Schündeln |
Goethe-Universität Frankfurt | Bio/Vote History | ||
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 Jordi Galí |
Barcelona GSE | Bio/Vote History | ||
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 Luis Garicano |
LSE | Bio/Vote History | ||
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 Yuriy Gorodnichenko |
Berkeley | Bio/Vote History | ||
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 Rachel Griffith |
University of Manchester | Did Not Answer | Bio/Vote History | |
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 Veronica Guerrieri |
Chicago Booth | Bio/Vote History | ||
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 Luigi Guiso |
Einaudi Institute for Economics and Finance | Bio/Vote History | ||
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 Sergei Guriev |
Sciences Po | Bio/Vote History | ||
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 Patrick Honohan |
Trinity College Dublin | Bio/Vote History | ||
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Shareholder wealth may be the correct criterion in the long-run. But neglecting social and environmental considerations in a single-minded pursuit of immediate equity price increases can easily rebound later and result in lower equity prices long-term.
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 Beata Javorcik |
University of Oxford | Bio/Vote History | ||
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 Jan Pieter Krahnen |
Goethe University Frankfurt | Bio/Vote History | ||
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The decision taken by management should, to the extent possible, reflect the preferences of shareholders - whether that is identical to shareholder value or not depends on their preferences. The practical problem today is that shareholder preferences are not elicited...
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 Botond Kőszegi |
Central European University | Did Not Answer | Bio/Vote History | |
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 Eliana La Ferrara |
Harvard Kennedy | Did Not Answer | Bio/Vote History | |
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 Christian Leuz |
Chicago Booth | Bio/Vote History | ||
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For at least two reasons. First, (negative) externalities from corp activities. Policy doesn't always force firms to internalize them. Second, some shareholders might care about a firm's impact on society (e.g. environment) even when it reduce profit. Max sh welfare not sh wealth
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 Thierry Mayer |
Sciences-Po | Did Not Answer | Bio/Vote History | |
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 Costas Meghir |
Yale | Bio/Vote History | ||
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 Marco Pagano |
Università di Napoli Federico II | Bio/Vote History | ||
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 Lubos Pastor |
Chicago Booth | Did Not Answer | Bio/Vote History | |
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 Torsten Persson |
Stockholm University | Bio/Vote History | ||
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 Christopher Pissarides |
London School of Economics and Political Science | Did Not Answer | Bio/Vote History | |
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 Richard Portes |
London Business School | Bio/Vote History | ||
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 Canice Prendergast |
Chicago Booth | Bio/Vote History | ||
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 Carol Propper |
Imperial College London | Bio/Vote History | ||
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 Imran Rasul |
University College London | Did Not Answer | Bio/Vote History | |
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 Lucrezia Reichlin |
London Business School | Bio/Vote History | ||
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 Ricardo Reis |
London School of Economics | Bio/Vote History | ||
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Without a mechanism for accountability and incentives in the firm that includes other new stakeholders, then adding these objectives to management would just increase managerial discretion.
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 Rafael Repullo |
CEMFI | Bio/Vote History | ||
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 Hélène Rey |
London Business School | Did Not Answer | Bio/Vote History | |
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 Antoinette Schoar |
MIT | Bio/Vote History | ||
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 Kjetil Storesletten |
University of Minnesota | Bio/Vote History | ||
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 Daniel Sturm |
London School of Economics | Bio/Vote History | ||
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 Silvana Tenreyro |
LSE | Bio/Vote History | ||
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 John Van Reenen |
LSE | Bio/Vote History | ||
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Companies with market power have some latitude to make decisions. At the margin, it is better if they make ethical choices (e.g. to consider more than producer surplus) rather than unethical ones, even if this costs shareholders some value.
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 Rick Van der Ploeg |
Oxford | Bio/Vote History | ||
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Taking a stakeholder perspective including the impact of the company on justice, distribution, climate, risk of conflict, etcetera is better as a long-term objective.
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 John Vickers |
Oxford | Bio/Vote History | ||
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Statement would be true only under implausible assumptions about absence of externalities and market power
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 Hans-Joachim Voth |
University of Zurich | Bio/Vote History | ||
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 Karl Whelan |
University College Dublin | Bio/Vote History | ||
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This seems a very extreme form of "invisible hand" argument in which everyone pursuing their own interests results in the best possible outcome. In reality, social norms around avoiding certain corporate behaviors with bad social consequences are a good thing.
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 Charles Wyplosz |
The Graduate Institute Geneva | Bio/Vote History | ||
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Question B Participant Responses
| Participant | University | Vote | Confidence | Bio/Vote History |
|---|---|---|---|---|
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Franklin Allen |
Imperial College London | Bio/Vote History | ||
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Leadership by the CEO seems critical to firm success. Presumably the market ensures that some degree marginal benefit and marginal compensation are aligned. However, there are many wedges such as externalities and taxation that may prevent this. may
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Pol Antras |
Harvard | Bio/Vote History | ||
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Olivier Blanchard |
Peterson Institute | Bio/Vote History | ||
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The MPL of a good CEO can be very substantial.
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Nicholas Bloom |
Stanford | Bio/Vote History | ||
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This is impossible to know. Next month we will be asked "how long is a piece of string" :-). You can say the marginal contribution is >0, but comparing this to salary is not possible.
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Richard William Blundell |
University College London | Did Not Answer | Bio/Vote History | |
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Maristella Botticini |
Bocconi | Bio/Vote History | ||
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Agnès Bénassy-Quéré |
Paris School of Economics | Did Not Answer | Bio/Vote History | |
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Elena Carletti |
Bocconi | Bio/Vote History | ||
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Jean-Pierre Danthine |
Paris School of Economics | Bio/Vote History | ||
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Paul De Grauwe |
LSE | Bio/Vote History | ||
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Jan Eeckhout |
UPF Barcelona | Bio/Vote History | ||
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There are a lot of frictions...But even if there are none and managers get the marginal contribution to firm value, that does not mean firm value is efficient. Managers help build firm value through market power, and hence managers are overpaid relative to the efficient benchmark
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Ernst Fehr |
Universität Zurich | Did Not Answer | Bio/Vote History | |
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Xavier Freixas |
Barcelona GSE | Bio/Vote History | ||
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Nicola Fuchs-Schündeln |
Goethe-Universität Frankfurt | Bio/Vote History | ||
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Jordi Galí |
Barcelona GSE | Bio/Vote History | ||
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Luis Garicano |
LSE | Bio/Vote History | ||
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Yuriy Gorodnichenko |
Berkeley | Bio/Vote History | ||
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Rachel Griffith |
University of Manchester | Did Not Answer | Bio/Vote History | |
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Veronica Guerrieri |
Chicago Booth | Bio/Vote History | ||
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Luigi Guiso |
Einaudi Institute for Economics and Finance | Bio/Vote History | ||
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Sergei Guriev |
Sciences Po | Bio/Vote History | ||
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Patrick Honohan |
Trinity College Dublin | Bio/Vote History | ||
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Wide variance. Some are, some not.
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Beata Javorcik |
University of Oxford | Bio/Vote History | ||
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Jan Pieter Krahnen |
Goethe University Frankfurt | Bio/Vote History | ||
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I do not think that a clearcut judgement as to whether the MP of managers is greater or smaller than their payment can seriously be made. There is heterogeneity and variation...
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Botond Kőszegi |
Central European University | Did Not Answer | Bio/Vote History | |
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Eliana La Ferrara |
Harvard Kennedy | Did Not Answer | Bio/Vote History | |
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Christian Leuz |
Chicago Booth | Bio/Vote History | ||
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Hard to determine. Not aware of evidence showing this convincingly. There is evidence of overpay for firms with weak governance and for pay for luck, but not clear that the average CEO is paid above marginal product.
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Thierry Mayer |
Sciences-Po | Did Not Answer | Bio/Vote History | |
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Costas Meghir |
Yale | Bio/Vote History | ||
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Marco Pagano |
Università di Napoli Federico II | Bio/Vote History | ||
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Lubos Pastor |
Chicago Booth | Did Not Answer | Bio/Vote History | |
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Torsten Persson |
Stockholm University | Bio/Vote History | ||
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Christopher Pissarides |
London School of Economics and Political Science | Did Not Answer | Bio/Vote History | |
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Richard Portes |
London Business School | Bio/Vote History | ||
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Canice Prendergast |
Chicago Booth | Bio/Vote History | ||
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Carol Propper |
Imperial College London | Bio/Vote History | ||
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Imran Rasul |
University College London | Did Not Answer | Bio/Vote History | |
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Lucrezia Reichlin |
London Business School | Bio/Vote History | ||
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Ricardo Reis |
London School of Economics | Bio/Vote History | ||
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Rafael Repullo |
CEMFI | Bio/Vote History | ||
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Hélène Rey |
London Business School | Did Not Answer | Bio/Vote History | |
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Antoinette Schoar |
MIT | Bio/Vote History | ||
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Kjetil Storesletten |
University of Minnesota | Bio/Vote History | ||
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Daniel Sturm |
London School of Economics | Bio/Vote History | ||
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Silvana Tenreyro |
LSE | Bio/Vote History | ||
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John Van Reenen |
LSE | Bio/Vote History | ||
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Rick Van der Ploeg |
Oxford | Bio/Vote History | ||
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Economy of superstars. Not enough countervailing power on boards of companies.
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John Vickers |
Oxford | Bio/Vote History | ||
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Hans-Joachim Voth |
University of Zurich | Bio/Vote History | ||
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Karl Whelan |
University College Dublin | Bio/Vote History | ||
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I suspect this is true. Actually figuring out the marginal value of a corporate CEO is tricky but boards may consider it worth paying a huge salary for a person (but a small amount for a firm) just in case the next option does the job marginally worse.
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Charles Wyplosz |
The Graduate Institute Geneva | Bio/Vote History | ||
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If it does it means that there is something wrong with management
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