By Rajesh Chhabara, Managing Director, CSRWorks International
When markets plunge, the public story often narrows to one emotionally satisfying question: should the CEO resign?
It is understandable. A resignation is immediate and visible. It feels like accountability. It also gives investors and the public a single person to associate with a complex event.
Indonesia’s recent market rout produced exactly that moment. After a two-day sell-off that wiped out around US$84 billion in value, the CEO of the Indonesia Stock Exchange (IDX), Iman Rachman, stepped down on Friday, saying he was taking responsibility for the “recent market condition”. The Jakarta Composite fell 7.35% on Wednesday and another 1.06% on Thursday, before rallying 1.18% on Friday. The trigger was a warning by MSCI that it may downgrade Indonesia from emerging market to frontier market status, highlighting concerns around market investability and trading transparency.
Those are the headlines. The governance question is what comes next, and whether resignation is the start of reform or a substitute for it.
The seductive simplicity of a resignation
Boards reach for resignations in crises for a reason. A leadership exit can do three things quickly.
First, it signals responsibility when stakeholders feel unheard. Second, it resets confidence when leadership credibility has been damaged. Third, it removes friction if major change is needed fast.
But governance is not theatre. A resignation is a signal, not an outcome. Signals fade quickly.
If leadership change is not followed by tangible reforms, markets will treat it as optics. In the worst cases, resignation becomes scapegoating. A leader absorbs the anger, the system stays the same, and the institution drifts back to business as usual.
The real issue is not volatility, it is investability
This is not simply a story about prices falling. MSCI’s warning speaks to a deeper concern about investability. Investors have pointed to opacity in shareholding structures, questions about free float clarity, and concerns around possible trading behaviours that undermine proper price formation.
That matters because market classification is not a marketing label. “Emerging” status is a judgement about accessibility, transparency, tradability, and institutional reliability. When an index provider signals downgrade risk, many global investors hear a simple message. Capital will be cautious until the rules, visibility, and enforcement environment are credible.
Seen through that lens, this is not a “one leader” problem. It is a system design problem.
A stock exchange is not a typical company
Governance professionals sometimes default to corporate playbooks. Focus on tone at the top. Improve communications. Change leadership. These steps can help, but a stock exchange is not a typical company. It is market infrastructure. It sets rules, enables surveillance, and anchors trust.
That changes the accountability calculus.
In a market institution, boards and leadership have two duties that can pull in different directions.
One is continuity. The institution must remain stable and credible through stress. The other is integrity. The institution must show, quickly and convincingly, that transparency and governance weaknesses are being corrected.
A CEO exit may help integrity if it restores confidence. It can also create continuity risk if interim authority is unclear, reforms lose momentum, or the organisation slips into a leadership vacuum. In a market crisis, a vacuum is not neutral. It is destabilising.
This is why the board’s role is central. The board must ensure the institution does not suffer a second shock, this time caused by governance uncertainty.
The accountability test boards should apply
Here is the test I use in boardrooms when executives resign amid a crisis.
Does the resignation increase the probability of reform?
If the answer is yes, because it unlocks action, improves credibility, and accelerates delivery, then resignation can be genuine accountability.
If the answer is no, because it becomes the main act while the institution avoids hard disclosure, avoids clear milestones, and avoids enforcement, then resignation is scapegoating.
Scapegoating is dangerous because it treats trust as something you can purchase with personnel changes. In markets, trust returns through process and proof.
What real accountability should look like now
If Indonesia’s capital market is to turn this episode into a pivot point rather than a scar, stakeholders should look for four governance outputs. Each should come with dates, not aspirations.
1) A clear diagnosis, not a vague apology
“Taking responsibility” sounds noble, but investors need clarity.
What exactly are the investability blockers? Which are structural issues and which are perception issues? What sits within the exchange’s control, and what requires regulator action?
Confidence cannot be rebuilt if the diagnosis remains fuzzy.
2) A time-bound transparency programme
If the concerns centre on free float and ownership structures, the response must improve visibility for the market.
Not “we are engaging MSCI”, but what will change in disclosure requirements? How will transparency improve? What deadlines apply? What happens if issuers do not comply?
The market does not need slogans. It needs a roadmap.
3) A credible market integrity stance
When investors raise concerns about trading behaviour undermining price formation, reassurance does not come from press briefings. It comes from evidence that surveillance is robust, enforcement is real, and consequences are consistent.
Credibility is built by what you are willing to investigate, and what you are willing to act on.
4) Continuity through transition
If leadership is changing, governance must be explicit.
Who is leading now? What mandate do they have? What is the transition plan and timeline?
Crisis transitions require firm hands, not interim ambiguity.
The bigger lesson for boards everywhere
This episode is not only about Indonesia. It is a reminder for boards across markets and regulated industries. In a crisis, the instinct for symbolic accountability is powerful. Symbolism without reform is a short-lived asset.
A resignation may calm nerves for a day. Institutional improvements calm markets for years.
So, should a CEO resign amid a mega crisis?
Sometimes, yes. But the standard should be simple. A crisis resignation must buy credibility and speed for reform. It must not replace reform.
If resignation is the headline, the board must ensure the story does not end there.
