CBS stock in free fall as board orders probe against Les Moonves

The board of directors of CBS Corp. (CBS) Monday decided to have the sexual misconduct allegations against CEO Les Moonves investigated by outside lawyers and not to take any further action against him for now. Speculation was rife about Moonves’ fate since last week when reports about the scandal first came in the media.

CBS shares took a fresh hit Monday and closed the day’s session down 5%, continuing the losing streak that began last week. The stock recovered slightly in the extended session, following the board meeting.  The stock has been facing the risk of a downgrade since the issue popped up, and analysts are exercising caution before recommending it to potential investors.

A report published by New Yorker Friday revealed that six female employees of CBS alleged that Moonves engaged in sexual misconduct with them. Earlier, the board had hinted at conducting an investigation into CBS’ workplace culture and the charges against Moonves. The complainants claimed their careers were spoiled after they resisted Moonves’ advances on multiple occasions from the 1980s to the 2000s.

CBS shares took a fresh hit Monday and closed the day’s session down 5%, continuing the losing streak that began last week

Moonves had played a key role in the infamous legal battle between a section of CBS’ board members and the company’s controlling stakeholder Shari Redstone, who wanted to re-merge the company with Viacom (VIA), another firm owned by Redstone and National Amusements.

The exposure came at the wrong time for Moonves and others who resisted Redstone’s de-merger move. Some market watchers believe Moonves’ fate was almost sealed when Redstone last week suggested that CBS conduct a ‘thorough, open and transparent’ investigation into the allegations. The whole episode has left the company’s management succession plans in limbo and put the future of corporate governance at stake.

It is estimated that CBS lost as much as $1.5 billion in market value since Friday when the detailed news article triggered a selling spree at the stock market. Things got worse when some of the senior offices of CBS went on the record later in the day.