Stanford Study Explores Public Perception of Unethical CEOs
A new study from the Stanford’s Graduate School of Business conducted by the Rock Center for Corporate Governance revealed an extreme disconnect between the perception of unethical CEOs and business leaders and what the appropriate punishment for them should be.
The consensus surprised researchers: nearly 50 percent of Americans surveyed believe the least forgivable CEO behavior involves “violations of trust between company and customer,” regardless of the explicit legality of the behavior or the public or internal corporate impact. This extends to an evaluation of the CEO’s personal decisions. Stanford researcher Brian Tayan says, “The public was surprisingly judgmental about some unethical CEOs who have an affair with a subordinate. The line between ‘personal’ and ‘corporate’ matters is more blurred than we realized.”
Among the near 1,600 Americans who took part in the survey, the consensus on fair punishment for these types of ethical violations seems to be a swift and immediate dismissal.
“We find that the public is highly critical of—and very willing to fire—CEOs who engage in behaviors that are morally or ethically questionable, even if these actions are not illegal and in some cases even if they cause no obvious harm to shareholders, employees, or the public,” says Professor David F. Larcker, Stanford Graduate School of Business. “This reflects, in part, the public’s lingering distrust of large corporations and CEOs in general.”
Stanford Corporate Governance Lecturer Nick Donatiello also added, “It is not surprising, after years of stories in the press about CEOs getting away with bad behavior and in some cases earning large financial rewards along the way, that many Americans want to see higher levels of accountability. For corporations and their boards, this signals that the reputational ramifications for CEO misconduct — even personal misconduct — are very high, and require a decisive and public response.”
Click here to read more about the study.
About the Author
Jonathan Pfeffer
Jonathan Pfeffer joined the Clear Admit and MetroMBA teams in 2015 after spending several years as an arts/culture writer, editor, and radio producer. In addition to his role as contributing writer at MetroMBA and contributing editor at Clear Admit, he is co-founder and lead producer of the Clear Admit MBA Admissions Podcast. He holds a BA in Film/Video, Ethnomusicology, and Media Studies from Oberlin College.
