Ostentatiously wealthy CEOs more likely to run problematic companies

Remind you of anyone?

A new working paper (pdf, £) from the American National Bureau of Economic Research finds that while ostentatious displays of wealth by CEOs don't make them more likely to commit crimes, the companies they run are more problematic:

We examine . . . executives’ behavior outside the workplace, as measured by their ownership of luxury goods (low "frugality") . . . We do not find a relation between executives’ frugality and the propensity to perpetrate fraud. However, as predicted, we find that unfrugal CEOs oversee a relatively loose control environment characterized by relatively high probabilities of other insiders perpetrating fraud and unintentional material reporting errors. Further, cultural changes associated with an increase in fraud risk are more likely during unfrugal (vs. frugal) CEOs' reign, including the appointment of an unfrugal CFO, an increase in executives’ equity-based incentives to misreport, and a decline in measures of board monitoring intensity.

So "unfrugal" bosses run a "loose control environment" with "high probabilities of unintentional... errors". If only there were some story this week that neatly illustrated the theory:

Jubilee stewards boss led 'champagne lifestyle' while guarded by trainees

  • Trainees used as “bodyguards” while she hit the town
  • Treated as VIP while she shopped, wined and dined
  • On one trip bought Hummer car worth £30,000+

Director of Jubilee stewards firm had five companies "struck off"

The director of a security company who forced unpaid jobseekers to sleep rough before assisting at the Jubilee pageant has had a string of previous companies "struck off" by regulators after a failure to submit accounts.

Manager at Jubilee stewards firm and "illegal access to police files"

A senior manager for Close Protection UK — the firm at the centre of the Jubilee stewards scandal — was passed highly sensitive information from the police national computer, it has been claimed.

 Oh yes, that's right. Well, don't say we weren't warned.

A stretch Hummer. If you see a CEO with one, steer clear. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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At last, Jeremy Corbyn gets the biography he deserves

Liam Young reviews Richard Seymour's Corbyn: The Strange Rebirth of Radical Politics.

Corbyn: The Strange Rebirth of Radical Politics is the fullest and fairest account of Jeremy Corbyn’s rise released to date. In avoiding much of the rhetoric espoused in similar accounts focusing on Corbyn’s early career this book provides a frank account of how the unlikely leader took charge of the Labour party. It is a very readable account too. Richard Seymour writes plainly but effectively and his writing is both accessible and incredibly informative.

Seymour attempts two monumental tasks in this piece: first he attempts to account for Corbyn’s rise and then he attempts to predict where such a rise will take him, the Labour party and the wider left. Zoe Williams wrote that Rosa Prince’s Comrade Corbyn was an account of “ex-girlfriends, the state of his flat” and featured “very little ideological insight”. Seymour does the opposite. In simultaneously engaging with Marxist and Gramscian theory, Seymour provides readers with something of academic value in the place of such gossip.

For any supporter of Corbyn, the first few chapters are a trip down Memroy Lane. Reading of the last minute rush to get Corbyn on the ballot paper sends the heart beating once more. While perhaps a niche political event, supporters know where they were the minute Corbyn’s place on the ballot was confirmed. The fact that we know the outcome of the uncertainty that surrounded the leadership election makes for palpable reading.

Seymour’s work is not simply the polar-opposite of Prince’s hit-job though. It would be wrong to suggest that it is a positive, self-fulfilling account of Corbyn’s rise. In many ways it is a hard hitting and realistic look at what lies ahead. For supporters of the Labour leader much of Seymour’s analysis will be discomforting; indeed the writer concludes that it is likely “labourism” will outlive “Corbynism”.

Such a view is hardly surprising though. Seymour’s repertoire of anti-establishment work suggests that it was always unlikely he would find a comfortable home in an establishment party. In this sense it suffers from being an account written by an outsider looking in. While the Marxist analysis of the Labour party is thought-provoking it seems too lengthy and seems to fit with an orthodox view surrounding the inevitable death of the Labour party.

Seymour’s concentration on “movement-building” is pertinent though. Utilising Jeremy’s own words on such a phenomenon is an effective tool. In drawing this distinction Seymour pokes at an open wound on the left asking exactly where all of this fits. It is about time that frank discussion on this topic was had. While there is a range of different opinions on the matter, Seymour’s intervention is an important initial step. It is an awkward conversation that the left can put off no longer.

The criticism levelled at the media is also well founded and long overdue. Seymour’s take on long established journalists who refused to accept Corbynmania makes for entertaining reading. On a more important note the fact that he credits social media as a central part of Corbyn’s campaign is interesting. The importance of this often overlooked element has been a point of debate within “Team Corbyn” and Seymour is right to poke at it.

Seymour’s work is, on the whole, a refreshing take on the events of last summer and a thought-provoking piece on the future of the Labour party. It is important to note that rather than viewing this book as an account of Corbyn’s campaign it should be seen as a review of the context surrounding Corbyn’s victory. Given that context is open to interpretation it is only fair to add the caveat that it should be read with an understanding of Seymour’s ideological foundation. Though I disagree with his conclusion concerning the Labour party’s future, I found it an important read. With an accessible yet authoritative tone Seymour manages the task of providing an academic insight into Corbyn’s election. Such analysis is far more valuable than words wasted on rumour and gossip – Seymour does well to avoid this and should be proud to have done so.

Liam Young is a commentator for the IndependentNew Statesman, Mirror and others.