Academia.edu no longer supports Internet Explorer.
To browse Academia.edu and the wider internet faster and more securely, please take a few seconds to upgrade your browser.
2014
Purpose - To evaluate the extent to which hubristic behaviour on the part of Thomas Farrow contributed to the downfall of Farrow’s Bank in 1920. Design/methodology/approach - The article traces the way in which Thomas Farrow’s behaviour changed over the course of his managerial career using primary sources obtained from various British archives, including: court records, witness statements, auditors’ reports, newspapers, journals, and personal letters. The article then evaluates Farrow’s actions in relation to the criteria outlined in Petit and Bollaert’s (2012) ‘Framework for Diagnosing CEO Hubris’ so as to assess how far he can be said to have become afflicted by managerial hubris. Findings - All the collected evidence points to the conclusion that Thomas Farrow had, by the time of the Bank’s collapse in 1920, become afflicted by managerial hubris. This was reflected most clearly in the fact that he increasingly came to view himself as being somehow above and beyond the laws of the wider community. As a result, he felt little compunction about fraudulently writing-up the Bank’s assets so as to cover the huge losses that his reckless investments had produced. Practical implications - The Farrow’s Bank episode confirms that the probability of management hubris materialising is enhanced when external control mechanisms are either lacking or inefficiently applied. On top of this, the amateurish organizational set-up of the Bank also suggests that the likelihood of hubris syndrome developing is enhanced when organisations themselves grant too much discretion to their leaders. Originality/value - The paper breaks new ground by applying the latest management and psychology theories on the subject of leadership hubris to the field of financial management. Its value lies in the fact that it provides scholars and practitioners with an in-depth insight into how hubris syndrome can develop in organizational settings.