Who stays and who goes? Firms’ reactions to strategic leaders’ personal indiscretions

Abstract

Purpose The 2025 “kiss cam” incident involving Astronomer Chief Executive Officer (CEO) Andy Byron illustrates how personal indiscretions by strategic leaders can quickly become corporate crises. This study examines the likelihood of dismissal after a personal indiscretion of a strategic leader becomes public. Using situational crisis communication theory, we argue that the proximity of an indiscretion shapes attribution and board dismissal decisions and corporate social performance (CSP) moderates this relationship. Design/methodology/approach We test our hypotheses using a database of business news retrieved through Factiva, identifying 135 cases of personal indiscretions by strategic leaders in the US and Canada (2008–2019), complemented by a matched control sample of equal size. We assess the likelihood of leader dismissal and use logistic regression models to examine the hypothesized relationships and moderation effects. Findings Leaders are more likely to be dismissed after personal indiscretions, especially when the behavior is proximal to the firm or its stakeholders. CSP mitigates the effects of distal indiscretions but intensifies penalties for proximal ones. Research limitations/implications Our study has limitations that can be addressed by future research. First, our sample is restricted to the United States and Canada from 2008–2019 – a period shaped by specific cultural, historical and institutional norms. Future work could examine other countries or industries to assess how societal expectations of leader behavior and board responses vary across contexts. Second, because our analysis relies on secondary data and media coverage, it may reflect selection bias toward highly publicized cases. Surveys, interviews or experiments could complement this approach and capture less visible incidents or stakeholder perceptions more directly, as well as provide deeper insight into how boards justify their dismissal decisions. Third, although we focus on dismissal, we do not consider post-dismissal dynamics such as leader rehabilitation, reputational recovery or firm outcomes following replacement. Future studies could explore how boards communicate these decisions and how they affect stakeholder trust over time (Schepker and Barker, 2018). Fourth, we measure CSP using Dow Jones Sustainability Index, which, like any metric, has limitations. Future research could use alternative CSP measures to test the robustness of our findings and further examine CSP’s dual role as buffer and burden. Fifth, while we study personal indiscretions, other personal behaviors, such as affective states (Liu, Tian, and Zhang, 2023), also shape organizational outcomes, including tax planning and performance (Correa et al., 2025). Examining a broader set of personal behaviors would enrich our understanding of leader effects. Finally, although we propose a theoretical framework for a largely phenomenon-driven literature, future studies can use and refine this model to better identify the mechanisms underlying board responses to leaders’ personal misconduct. Practical implications Our study also offers practical implications. First, boards can use these findings to strengthen executive selection and oversight. Personal indiscretions, especially those proximal to the firm or involving key stakeholders, can rapidly escalate into organizational crises, making it essential for boards to establish clear, consistent procedures for evaluating such incidents. Second, firms with strong CSPs should recognize that social reputation can both protect and expose them: while moral capital may buffer minor controversies, it heightens stakeholder disappointment when serious indiscretions occur. Leaders therefore must maintain ethical consistency beyond the workplace, as personal conduct and corporate reputation are closely linked. Finally, although leadership turnover can harm short-term performance (Schepker et al., 2017), our results show that boards increasingly accept these costs to preserve legitimacy when personal misconduct threatens stakeholder trust. This underscores the growing importance of personal indiscretions in succession dynamics and highlights the need for behavioral and ethical criteria in succession planning and leadership evaluation. Originality/value The study extends SCCT to leaders’ personal misconduct, challenges the separate-affairs hypothesis and demonstrates how a firm’s social reputation can both protect and constrain its leaders.