The divorce that brings uncertainty into Amazon

The recent announcement of the divorce between Jeff and MacKenzie Bezos might impact Amazon’s performance in the medium term. Since the notice at the beginning of 2019, the stock of Amazon has shown stability [1], however, it could change as the divorce process continues.

The breakup could also impact Jeff’s attitudes in terms of decision-making [2]. Currently, Amazon is developing businesses in New York and Arlington (Virginia) and working in markets of smart home gadgets, health care, groceries, robotics as well as looking for new international trades [1].

Jeff is Amazon’s founder and currently performs as CEO, chairman and top shareholder [1]. The rest of the company’s board might be discussing the different scenarios that the divorce could bring and even consider the decisions taken by Jeff before the public notification of the separation. The outcome of the dissolution is uncertain due to Jeff and MacKenzie got married without a prenuptial agreement [3], in 1993.

Washington, the state where they reside, is a “community state” and it means that all the assets and debts they got during they matrimony will be divided 50/50 [4], including Jeff’s Amazon share. That is the reason why others executives would be wondering the direction the process will take. The result of this could also affect Jeff’s position as one of the richest person in the world [4]. In 2018, he was the richest person around the globe according to Forbes [5].

Now, Jeff’s productivity, concentration and energy could be affected by the process of the separation. At least, this is one of the expected scenarios when a CEO gets divorce affecting positive or negative the company. For instance, when the CEO and chairman of News Corp, Rupert Murdoch, announced his divorce, the shares of the company went up 1.4 per cent, but when the CEO and chairman of Continental Resources, Harold Hamm, announced the same, the firm’s shares dropped 2.9 per cent [2].

MacKenzie supported Jeff in his decision of starting up Amazon, in 1994, participating in the brainstorming for the company’s name and acting as the first enterprise’s accountant [6].

In case Jeff loses part of his share in Amazon, he will also lose control and influence in the company. On the internal context, as the dissolution process remains, it could be expected that he makes more aggressive corporate bets [7]. On the external one, the divorce expenditures and potential scandals [8] can change the direction of any agreement they are currently negotiating.

Negotiate Jeff’s USD$137 million fortune will take time as it is expected to be one of the largest divorces in the history [3].

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[1]. Rubin, B.F. (2019). Jeff Bezos' $140 billion divorce: How it affects Amazon. Cnet, 24 January. Available from: https://www.cnet.com/news/amazon-ceo-jeff-bezos-140b-divorce-what-you-need-to-know/ [Accessed 31 January 2019].

[2]. Larcker, D.F. et al. (2013). Separation Anxiety: The Impact of CEO Divorce on Shareholders. Stanford Closer Look Series. Available from: https://www.gsb.stanford.edu/sites/gsb/files/publication-pdf/cgri-closer-look-36-ceo-divorce.pdf [Accessed 31 January 2019].

[3]. Potter, Z. (2019). Jeff and MacKenzie Bezos Are Divorcing. So, Who's Protecting That Little Asset Called Amazon? Entrepreneur, 28 January. Available from: https://www.entrepreneur.com/article/326995 [Accessed 31 January 2019].

[4]. Butler, B. and Heil, E. (2019). Jeff Bezos announces divorce from MacKenzie Bezos after 25 years together. The Washington Post, 9 January. Available from: https://www.washingtonpost.com/arts-entertainment/2019/01/09/jeff-bezos-announces-divorce-mackenzie-bezos-after-years-together/?utm_term=.917c7ad11dc1 [Accessed 31 January 2019].

[5] Kroll, L. and Dolan, K. (2018). The World's Billionaires 2018. Forbes. Available from: https://www.forbes.com/billionaires/#1034c49251c7 [Accessed 3 February 2019].

[6]. Bromwich, J.E. and Alter, A. (2019). Who Is MacKenzie Bezos? The New York Times, 12 January. Available from: https://www.nytimes.com/2019/01/12/style/jeff-bezos-mackenzie-divorce.html [Accessed 31 January 2019].

[7]. The Economist (2019). What the break-up of the world’s richest couple means for Amazon. 17 January. Available from: https://www.economist.com/business/2019/01/19/what-the-break-up-of-the-worlds-richest-couple-means-for-amazon [Accessed 31 January 2019].

[8]. Stewart, J.B. (2019). Why Jeff Bezos' Divorce Should Worry Amazon Investors. The New York Times, 18 January. Available from: https://www.nytimes.com/2019/01/18/business/bezos-divorce-amazon-stock.html [Accessed 31 January 2019].