Why CEOs fail: there are surprisingly common themes in the tales of chief executives who lead a company into troubled waters.

• Author: Cooper, Stephen F.
• Position: Performance Evaluation

THESE DAYS IT SEEMS one can hardly pick up a newspaper or click onto CNN without seeing a white-collar "perp walk" or a new report on a financial fiasco. The storyline is all too familiar: Corporate chiefs, lionized during the bull market, have failed the economic stakeholders. The fact is that corporate America's recent report card is troubling on a number of fronts.

Hundreds of companies have restated earnings, and the new CEO certification requirement all but ensures more to come. Business collapses have broken new records: Since 2001, according to our own Kroll Zolfo Cooper Research and that of bankruptcydata.com, 71 companies with assets greater than $1 billion have filed for bankruptcy, and 251 companies with assets greater than $100 million have failed. Responding to an outcry for -- or vacuum of -- accountability, lawmakers have passed corporate reform legislation with breathtaking speed. Investigations by the SEC, Congress, and judicial and regulatory officials are at an all-time high. It's no wonder corporate and management credibility is at an all-time low -- especially that of CEOs.

So what's behind the many meltdowns? It seems several factors have conspired to create the current crisis: a combination of systemic flaws, strategic errors, and human failings. Ultimately, however, I believe the root cause is the breakdown of management accountability at the CEO level, exacerbated by weaknesses in current corporate governance practices.

While the magnitude of this current wave of corporate crises is unprecedented, companies have been failing for decades. With every company there can be unique circumstances that catalyze its collapse: an industry-wide implosion (think telecom), an unrelenting foreign competitor (Japanese automakers), or even an unscrupulous executive (pick one). But fundamentally it is a CEO's job to lead a company to success -- or at least to avoid failure -- and it is the CEO who needs to be held accountable for performance.

As a restructuring specialist and interim executive, I have had the opportunity to see troubled companies from the inside. This position has provided insights into why, where, and in what ways CEOs can fall down on the job. In fact it is only by examining and understanding what's not working that an enterprise can be rehabilitated. And throughout a wide range of industries -- airlines, telecom, construction services, transportation, retail, energy -- there are surprisingly common themes...