CEO home life red flags – The Wall Street Journal

When does the personal become everybody’s business? That’s the question that boards of public companies often have to ask themselves. And the answer is often a difficult one.
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The abdominal behaviour of Harvey Weinstein which has given rise to the #MeToo movement has led to more company boards examining links between the board room and the bedroom. You may think the Weinstein case is extreme and "hey, it's Hollywood, but there is an increasing awareness that the personal lives of CEOs do matter to the health of a company. Prof David Larcker from Stanford Law School has studied the effect of divorce on CEOs and found that divorce often led to the end of the CEO's tenure. Larcker suggests that trusted board members should check in from time to time to ask the heads of companies how their home life was doing in order to put measures in place before it becomes a problem. But what about the CEO with the flashy lifestyle with the racehorses and the Ferraris; Markus Jooste and Angelo Agrizzi come to mind or the one that uses the company jet for personal use? Larcker and Bryan Tayan have listed the top warning signs displayed by employees who engage in occupation fraud in this article in the Wall Street Journal and "living beyond means", tops the list. And they quote a study that found that CEOs who "spend lavishly in their personal lives… have a higher likelihood of fraud or financial misstatement." – Linda van Tilburg

When a CEO's personal life should be made public

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