Beware the CEO Who Is Showered with Awards

Firms run by CEOs who had won major awards (such as CEO of the year) showed significant declines in stock prices, return on assets, and ability to meet market earnings expectations in the 3 years after the awards were won, according to research conducted by economists Ulrike Malmendier and Geoffrey Tate and reported by Adam Grant of Wharton. After CEOs win awards, they spend a lot of time on prestige-increasing tasks that may distract their attention from leading. Malmendier and Tate found that a CEO’s odds of writing a book nearly double after he or she wins an award.