The share prices of companies in the top quartile of CEO candor outperformed companies in the bottom quartile by 31%, according to a study by Rittenhouse Rankings.
For nine of the past 10 years, top-ranked companies have outperformed bottom-ranked companies on average by 18%.
"CEO candor is a competitive advantage because it mitigates reputational risks," said president L.J. Rittenhouse said. The study shows that CEOs who prize candor lead companies that typically benefit from more focused execution, disciplined accountability and a corporate culture in which employees are encouraged to ask questions and confront problems.
The 2010 survey results underscore the continuation of a disturbing decline in CEO candor, Rittenhouse noted. Total point deductions for candor-deficient statements increased 14% year-over-year. Since 2002, point deductions have increased 235%.
In the 2010 survey, DuPont CEO Ellen Kullman's candor score climbed to fourth place up from 39th in 2009. Sherwin-Williams, a perennial top-performer ranked first, just ahead of Honeywell CEO Dave Cote, a new addition to the survey.
The top ten-ranked companies are: