Your top manager is mildly flawed. Does that impact the stock’s value?
In a word, yes.
“An Executive’s Misdeeds Often Prove to Be Costly,” Wall Street Journal, May 27, 2015 B7. Drunk driving by the top boss costs 1.6%. If it’s the chief executive, the cost is 4.1%. About 65% of the execs studied kept their jobs.
What does it say about your culture if your chief executive’s flaws are known? If the CEO is observed jaywalking while walking to a meeting, can your company expect your employees to comply with all applicable laws? Your Code of Conduct does not distinguish between non-compliance with the Foreign Corrupt Practices Act and non-compliance with your record retention schedule.
Is a flawed senior executive a broken window, in the law enforcement context?