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Scoundrels in the C-Suite
Article

Scoundrels in the C-Suite

How Should the Board Respond When a CEO's Bad Behavior Makes the News?

David F. Larcker and Brian Tayan
Stanford Business, 2016
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Editorial Rating

7

Qualities

  • Analytical
  • Eye Opening
  • Overview

Recommendation

How should a board of directors handle a “misbehaving” CEO? This report by David F. Larcker and Brian Tayan of Stanford University reveals mixed conclusions as to the degree CEO misconduct harms organizations and shows how boards lack consistency in their responses to misconduct. These contradictions underscore the importance of the questions the authors raise about how boards should respond and work to prevent poor behavior from leadership figures. getAbstract recommends this report to board members and those interested in corporate governance issues.

Take-Aways

  • When CEOs misbehave, the board of directors must determine the impact these actions may have upon the organization’s reputation and value.
  • Not all CEO misconduct makes it into the news, but when the media do pick up on a story, it’s likely it will resurface for years after the initial report.
  • The share prices of companies whose CEOs face misconduct charges generally suffer, but not with certainty.

About the Authors

David Larcker is director and a senior faculty member at the Stanford Graduate School of Business Corporate Governance Research Initiative, where Brian Tayan is a researcher.

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