CEO Reputation Matters (even in death)
I could have told them so. Research (noted by WSJ’s Leslie Kwoh) from Lehigh University found that shareholders do think CEOs matter. They analyzed shareholders’ reactions to the unexpected deaths of chief executives by measuring the stock performance the day after the announcement as well as at other intervals leading up to 30 trading days afterwards. There was a 5.6% swing in share price on the day after the announcement that the CEO unexpectedly died (i.e., heart attack, plane crash). The swing was even more pronounced one month later, at 14.6% on average. Interestingly, this swing has grown considerably since the 1950s, 1960s and 1970s. CEO reputation and the CEO’s impact on the company’s performance MATTERS. Decades ago, people believed that companies ran themselves pretty much. The CEO’s decision-making, strategic direction and ability to motivate employees and outbeat the competition is clearly understood today to have a profound effect on corporate performance and by extension, reputation. Good proof to add to my deck on why CEOs matter. Thanks to Lehigh’s Tim Quigley and researchers!