The Harvard Business School has released a new working paper Managing Reputation: Evidence from Biographies of Corporate Directors.
The Executive summary states: A biography is part of a proxy statement summarizing a director’s past experience. For this study the authors analyzed almost 160,000 biographies of 12,895 directors to see how directors appear to make strategic disclosure choices about their past and current experience in biographies. Directors are less likely to disclose past and current directorships at firms that experienced adverse events such as accounting restatements, securities litigation, or bankruptcy. Directors who withhold information about adverse-event directorships experience a more favorable stock price reactions at appointment and lose fewer current directorships in the two years after the filing relative to the directors who disclose. However, there is no evidence that non-disclosure leads to different shareholder voting outcomes.
I find this interesting and it reminded me of the views an employee takes in a performance review or job interview where they tend to boost their strengths and downplay their weaknesses.
– If you are an investigative journalist, it will stand you in good stead to do proper in-depth biographical research coupled with background scanning when writing about the leadership of a company. Just like the due diligence or reference checking process, so that you can uncover the real person.
– As a person you have an option to be transparent. Although it is human nature to not disclose, tools like the Johari window becomes useful to assist. It is also important that you recognize whether it is the right thing to do. The Johari Window is a communication model which was developed by Joseph Luft and Harry Ingham in 1969. It helps people improves interpersonal interactions through assessing the ways in which they give and receive information.
– Since the tools exist today to do research about a person or a company, very little can remain hidden. WikiLeaks and the Panama papers certainly showed us that. Perhaps full disclosure upfront will build better trust.