The Economist, a British weekly newspaper focusing on current affairs, international business, politics, technology, and culture, published an article on October 19, 2023 titled, “How big is the role of luck in career success?” The article highlights a recent paper written by Atif Ellahie, Associate Professor in the David Eccles School of Accounting, with co-authors Martina Andreani and Lakshmanan Shivakumar. In the paper, Professor Ellahie and his co-authors examine the nonrecurring effects of the U.S. tax cuts and Jobs Act of 2017 on the remeasurement of deferred taxes. The authors find that while firms benefiting from tax windfall gains and being weakly scrutinized by investors, rewarded their CEOs for these “good luck” gains, firms with tax windfall losses or “bad luck” did not penalize their CEOs by paying them less. This evidence adds to the ongoing debate about whether CEOs should be rewarded for performance that is out of their control (i.e., pay for luck).
READ the article. READ the working paper.
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