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Chief Executives & Their Risky Lifestyles

If truth be told, CEO is a very high-stress job. A lot of company CEO’s might engage in risky behaviors like substance abuse or thrill seeking and that’s the primary reason why investors observe red flags. 

If truth be told, CEO is a very high-stress job. A lot of company CEO’s might engage in risky behaviors like substance abuse or thrill seeking and that’s the primary reason why investors observe red flags. But, sadly, the biggest problem is that you can’t recognize these signals easily. Just have a look at an example of Aubrey McClendon’s death. He was the CEO and Cofounder of Chesapeake Energy Corporation (NYSE: CHK) and found dead in his car. According to the early reports of Oklahoma doctors, he had traces of Doxylamine. They said, his blood contained an antihistamine (present in sleeping pills) at the time of death. Certainly, sleeping pills are not naturally harmful to health, except anyone can use them to overcome high job stress.

According to the author and researcher of a book named ‘secrets of CEO lifestyle’, Steve Tappin, “almost 2/3 of the corporation CEO’s are struggling.” He worked with the top neurologists to conduct neurological and physiological tests on Chief Executive Officers. Tappin found that there are several emotions involved behind a CEO’s struggle, i.e. disappointment, frustration, overwhelms, irritation and much more, which is definitely a health warning.

A lot of studies have already proved that a risk-taker is a great asset when it comes to the business environment. A person who has risk-taking abilities constitutes innovation and entrepreneurship. He knows what’s the best time to do profitable investments and discerns how to buy gold. But it doesn’t mean that every risk-taker becomes a winner or on the other side, we don’t have sufficient proves that risky personal behavior might lead to poor business performance. As a matter of fact, in the most extreme scenarios like sudden death, the stock will benefit the CEO with dicey lifestyle.

Social Class: It Matters Too

As a matter of fact, you think that if a CEO stays out of the headlines, it might work out! But this also isn’t the case. The investors are too sharp, and they already had a clue which chief executive will about to take risks, which they evaluate by their backgrounds. A recent survey conducted by the Arkansas University on 265 CEOs revealed that the chief executive officers who raised their social status by earning wealth and privilege, become the biggest risk-takers. On the other hand, people who came from a well-off background, usually see the world as safe.

The study further explains that the CEOs who had a history of upbringing in the lower socio-income status are non risk-takers as compared the ones who brought up in the upper class. Meanwhile, the CEOs who belonged to the middle-class are risk averse. The researcher said that the chief executive's orange website with lower social class have less to lose mentality when it comes to the business. Moreover, the study also explains what is financial risk-taking and why risk takers show signs of behavioral consistency.

What would be the effect of a CEO's Death on Stock Performance?

I know it sounds counterintuitive, but a sudden death of a CEO will positively affect the stock performance. When the death news goes on-air, the share prices of the company instantly increases. A similar case happened way back in 2015 when the chief executive officer of Tootsie Roll Industries Incorporation (NYSE: TR), Melvin Gordon met his untimely end. During the following week, the share prices of the Tootsie Roll company rose approximately 14 percent.

As per the separate studies conducted by the Georgia University and the Notre Dame University, more than half of the chief executive's deaths created the same positive effect on the stock performance. In their studies, the researchers evaluated the data of about 60 years (1950 to 2009). There were around 245 CEOs who died suddenly (those who have long-term illnesses are not included in the list).

The researchers further told that the data of years between 1989 to 2009, the average return posted by stock exchange that showed positive results was 8.6 percent. In contrast, the average negative return on stocks showed by stock exchange was 7.3 percent. During the years 1971 to 1988, the average gain on shares was 6.2 percent and the average loss was -4.6 percent. Moreover, the stock returns between the year 1950 to 1970, these numbers are 3.6 percent and -2.8 percent respectively. These findings propose that the investors responded positively with the increased instability.

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I am an entrepreneur, social media enthusiast & blogger. I invest in people & great ideas. I make social technology easy for people. I have been studying internet marketing and tech startups for years and I love to read and write about technology, blogging, gadgets, tip & tricks and gaming to share my knowledge and expertise.

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