Question 6.83

image 48. Based on an examination of 22 companies that announced large layoffs during 1994, Downs found a strong correlation between the size of the layoffs and the compensation of the CEOs” (K. Phillips, Wealth and Democracy, Broadway Books, New York, 2002, p. 151). Discuss why this positive correlation is probably explained by a third variable, the size of the company as measured by its number of employees.