Information leaks before CEO change
Financial gain and ethical cost
Bibliographic Data
| ID | 21696132 |
|---|---|
| Authors | Gregor Halff (0000-0002-6469-7615, Copenhagen Business School), Andrea Gregory (0000-0002-0711-7119, University of Huddersfield) |
| Year | 2020 |
| Volume | 24 |
| Issue | 1 |
| Pages | 19-29 |
| Publication date | 2020-03-20 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Journal of Communication Management (JOURNAL) |
| Journal identifiers | ISSN: 1363-254X • E-ISSN: 1478-0852 |
| Publisher | Emerald (PUBLISHER) |
| DOI | 10.1108/jcom-09-2019-0126 |
| OpenAlex | W2981227456 |
| Language | EN |
| References cited | 36 |
Purpose The purpose of this paper is to investigate whether there are information leaks immediately before CEOs change and – if so – whether some investors take financial advantage of such prior knowledge. It thirdly investigates the ethical, practical and professional options for communication managers to deal with such situations. Design/methodology/approach Working from sentiment theory of financial markets, the authors studied Internet search patterns for incoming CEO names and stock market movements immediately prior to the public mention or speculation of CEO change. Findings The authors find that in nearly a quarter of CEO changes at Fortune 500 companies, the name of the future CEO seems to have been leaked. Additionally, nearly half of those companies also experience extreme, otherwise unexplainable movements in the stock market. Originality/value This paper discovers the prevalence of extreme stock market movements for a company when the name of that company's next CEO has likely been leaked. Such leaks are an opportunity for unscrupulous investors, but they create ethical dilemmas for organizations. Communication managers typically respond by organizing tighter governance. However, to keep up with the speed of information and investments traveling through algorithms, organizing radical transparency could become an alternative instead
Business · Corporate governance · Economics · Financial market · Initial public offering · Originality · Speculation · Stock market · Complex Systems and Time Series Analysis · Corporate Finance and Governance · Financial Markets and Investment Strategies · Law · Accounting · Finance · Marketing
| Highly cited | No |
|---|