I've
written before about our paper, Sex,
Lies, and Firm Value. Sound corporate governance is immensely
important in protecting and creating shareholder value. Sound governance
requires the correct tone of management at the top of the firm, and
the boards insistence on this tone. Our research examines the links
between indiscretions in a manger's personal lives and the impact on the firm.
We are continuing our research on the topic, and alas, Wall Street
is continuing to provide us data points. The following quote comes from
an interesting article by Matt Egan, writing for CNN Money.
"Dov Charney, the ousted chairman of
American Apparel, is known for walking around his factory in his underwear and
talking openly about his sex life. The company's sales have plunged in recent
years and its stock now trades for 70 cents, down 96% from its high of nearly
$17.
Lululemon founder Dennis "Chip"
Wilson imperiled his company's brand last year by making snide remarks about
overweight customers. Wilson recently stepped down as chairman after
Lululemon's share price plunged in half over the past year."
Read Matt's entire article, and his interview
with one of my coauthors here.
Note the incidence of founders in our sample of indiscretions.
Also, while we are revising our research on the subject, the previous
version of the paper can be downloaded here.
All the best,
Ralph
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