THE IMPACT OF DIFFERENT DIMENSIONS OF CEO REPUTATION ON STAKEHOLDER PERCEPTIONS OF THE COMPANY

Abstract

The importance of a Chief Executive Officer’s (CEO) reputation in shaping stakeholder perceptions of companies has been documented by many studies. A good CEO reputation helps a company attract more customers, hire good employees and attract equity investors. Despite these findings, anecdotal evidence suggests that some Boards tend to support CEOs even if they had a questionable record. The CEO’s abilities tend to be cited as a reason. In addition, different dimensions of CEO reputation also seemed to affect stakeholder perceptions of a company differently. In existing literature, CEO reputation has generally not been analysed at a multi-dimensional level, integrating both business and private life contexts. Thus, in this study, the impact of different dimensions of CEO reputation (namely business competence, business integrity and private life reputation) on stakeholder perceptions was analysed. The results of this study showed that all three dimensions had a significant influence on participants’ general perception and trust of the CEO, especially integrity. As for participants’ perceptions towards the company, the three dimensions were found to exhibit different influences in different stakeholder contexts. The findings of this study provide important insights for Boards and CEOs. For Boards, the findings would enable them to better evaluate hiring and firing decisions of management staff, with the potential impact on stakeholder perceptions in mind. For CEOs, the findings would enable them to better understand the implications of their behaviour in both their business and private lives, and enable them to manage their reputation better.