Bloomberg reports:
In these polarizing times, chief executives are increasingly called on to take a stand on political and social issues. They shouldn’t, a Stanford University study suggests, at least not without the blessing of their boards.
Consumers remember more instances when they’ve boycotted in protest of a CEO’s politics than they recall products they’ve bought to show their support, according to the study. Even if consumer furor doesn’t have a massive or immediate financial impact, the controversy can damage the brand and distract executives from other, more important activities, said David Larcker, a professor at the Stanford University School of Business and a co-author of the research.
“From a board perspective, there really ought to be some discussion if the CEO is going to do something that’s going to attract a lot of attention,” said Larcker, who has studied CEO behavior for decades. “Even though that person is speaking for themselves, they’re identified with a company, and it can affect purchase behavior.”
