MarketWatch First Take: ‘Steve Jobs Syndrome’ strikes as Disney brings back Bob Iger, but history is not on their side

by | Nov 21, 2022 | Stock Market

Apple Computer Inc. brought Steve Jobs back to the company in 1997 and found amazing success, but that has led to a “Steve Jobs Syndrome” that convinces companies to bring back formerly successful top executives even as an academic study shows it may not be a good idea. The Walt Disney Co.
is the latest to rehire a former chief executive, surprising investors with the news of the return of Robert Iger to replace his handpicked successor, Bob Chapek. It follows the return of Howard Schultz to Starbucks Corp.
earlier this year, as that company faced a unionization wave, and makes one wonder if Inc.’s
board will urge Jeff Bezos to return if that company can’t pull out of its current doldrums.

Wall Street was effusive in its praise of the move, with Disney shares surging nearly 6% on Monday after the news was announced. The tenor among analysts was clear in a note by MoffettNathanson analysts entitled, “The Magic is Back.” “We have never hidden our affection for Mr. Iger and the job that he did in building Disney into the global powerhouse that it has become,” Michael Nathanson of MoffettNathanson wrote in a note to clients Monday. ” We have not recommended the shares since May 2020 for multiple reasons, including concern that the former CEO Bob Chapek had become wedded to a streaming strategy that did not make sense given today’s reality.” More from Therese: As Netflix and Disney move into ads, will Roku look to sell? That excitement should be tempered, though, as academics believe this type of hire does not succeed, on average. Known in those circles as a “boomerang CEO,” a study instead shows that the returning executive can face special challenges that put them on the same footing as any new CEO. Iger has been rehired for a two-year period to embark on an operational turnaround of the entertainment icon, a tough task for any seasoned CEO. But according to a study published in 2020 by the MIT Sloan Management Review, a company may be unrecognizable since their departure, because the business conditions differ dramatically — which may be apt for Iger’s return. The MIT study concluded that boomerang CEOs actually are not always the saviors that Wall Street is hoping for. “Boomerang CEOs indeed performed significantly worse than other types of CEOs,” was the conclusion. The authors compared data on 167 boomerang CEOs from 1992 to 2012 from the S&P Composite 15 …

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