Bob Iger's success in second turn at Disney is far from guaranteed
Bob Iger’s shocking and messy return to lead Disney is one of the most high profile comeback stories in recent years.
Why it matters: Though the company’s stock shot up on the news, closing up 6.2% Monday, his success is far from certain.
- “Those who are boomerangs might come back to bite, rather than benefit, the organization,” management professors from the University of North Carolina at Chapel Hill, UC Irvine and Marquette University have found.
- But in general, returning CEOs and founders have led their companies to perform “significantly worse than other types of CEOs,” the researchers found.
By the numbers: Xerox’s stock was down 60% after Paul Allaire took over for a year between 2000 and 2001.
- Dell lost a third of its value when Michael Dell returned.
- And because we’ve been talking about Enron again, let’s not forget about Ken Lay’s disastrous reprise.
The intrigue: What may partially prompt former chief executives to come back is a personal attachment to the company they ran.
- “[Iger] probably didn’t want to see his legacy go the way it was going,” Amy S. Hilliard, a professor with the University of Chicago Booth School of Business, tells Axios.
What to watch: Like other CEOs who were brought back, Iger is facing tough internal and macro conditions. He's facing high costs to build out the company's streaming infrastructure and content against a backdrop of slowing advertising spend and high inflation.
- Chapek’s “sudden and unexpected departure,” which comes after his contract was recently renewed, “coincides with Disney confronting more significant operating challenges,” Goldman Sachs’ research team wrote this morning.
- And because Chapek was largely sticking with the strategy "laid down by Iger that we have viewed as flawed from the outset ... we do not view Iger's return as necessarily a sign of better times to come," Cowen Research analysts wrote.