How A CEO’s Personal Life Can Affect A Company

A Stanford University study found that when a CEO goes through a divorce, it can have an impact on a company as well. “[R]ecent events suggest that shareholders pay attention to matters involving the personal lives of CEOs and take this information into account when making investment decisions,” wrote the study authors, David Larker, Allan McCall, and Brian Tayan of Stanford’s accounting and business schools. Specifically, shareholders analyzing a company with a CEO undergoing divorce look at the property settlement associated with the split, because an executive may be forced to sell personal shares in the company. They may also look at how a divorce can impact the productivity of the CEO, and the influence such a personal life rift can have on a CEO’s perspective of risk. Are there aspects of a CEO’s personal life that should be disclosed?