More CEOs are Getting Fired for Ethics Violations

More CEOs are getting pushed out of the job for ethics violations, according to new research, though the rise appears to has more to do with higher standards than any increase in bad behavior.

Between 2012 and 2016, ethical lapses accounted for 5.3% of forced CEO exits at the world’s largest 2,500 companies, according to a new report from PwC’s &Strategy consulting group. That’s up from 3.9% between 2007 and 2011, marking a 36% bump.

The last several years have certainly brought about some notable corporate scandals. Wells Fargo’s bogus accounts fiasco, which claimed the scalp of John Stumpf comes to mind, as does the ouster of former Priceline CEO Darren Huston over his affair with an employee.

Some other high-profile forced exits in recent years include that of former Yahoo CEO Scott Thompson, who an activist investor discovered had falsified parts of his resume.

“CEO accountability has been increased by higher levels of public scrutiny after the financial crisis diminished people’s tolerance for inconsiderate or excessive behavior.”

“Our data cannot show—and perhaps no data could—whether there’s more wrongdoing at large corporations today than in the past,” PwC partner Pera-Ola Karlsson said. “However, we doubt that’s the case, based on our own experience working with hundreds of companies over many years.”

Instead, the consultancy said CEO accountability has been increased by higher levels of public scrutiny after the financial crisis diminished people’s tolerance for inconsiderate or excessive behavior.

And all that public mistrust has converted to stricter regulations and corporate governance standards.

Technology could also be partly to blame, as the rise of instant messaging and social media creates new a theater for ethical lapses, while the 24-hours news cycle makes it tougher to keep a low profile.

Additionally, companies that have grown to capacity in their home markets are increasingly looking to expand offshore, lengthening their supply chains and exposing them more to bribery risks.

Supporting its hypothesis that standards had risen, PwC found that the overall share of CEOs forced out for ethics breaches at the largest companies was much greater than for smaller companies, demonstrating higher levels of public scrutiny.

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Ross Kelly
Ross Kelly is a London-based business journalist. He has been a staff correspondent or editor at The Wall Street Journal, Yahoo Finance and the Australian Associated Press.

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