I couldn’t help but be amused when I came across a Forbes article years ago on the dangers to a company when top Executives are distracted by opportunities for “adulation.”

“Cancel That Cover Shoot”
by Dana Wechsler Linden, Forbes, January, 31, 2005

Forbes picked the Charles Schwab Corp. one year as the company of the year. Within two years the stock dropped to $7 from $30, and 35% of the employees were on the street.

Now two economists -- Ulrike Malmendier of Stanford and Geoffrey Tate of Wharton--have gone beyond anecdotes. As specialists in "behavioral corporate finance," they studied the performance of more than 500 chief executives from 1975 to 2002. Half won media awards, such as best manager or entrepreneur of the year, and became pseudo-celebrities. The other half didn't win awards but had company performances and profiles remarkably similar to the ones who did.

Guess what? Celebrity leads to hubris -- and lower returns for shareholders. Malmendier and Tate don't name names, but here's some of what they found:

* Return on assets at companies with "celebrity" executives deteriorated steadily for at least three years after a big award, while those without did consistently better than the superstars.

* Award-winners write more books than nonwinners -- autobiographies, collections of self-help advice and homespun philosophy. Ghostwritten or not, they're distractions from the bottom line.

* The more awards chief executives win, the more likely they are to sit on three or more boards, leaving less time for their own directors.

None of this surprises Jeffrey Sonnenfeld, head of the Yale School of Management's Chief Executive Leadership Institute. "The truth is, people do get distracted. You can almost see them start to grow weary of the business and thrilled with the adulation."