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I think it is all about perception.
If you hire someone who has a history of either success running another company or competence rising through the corporate ladder labrynth, it can create a buzz around your business and more specifically your stock price. The same thing can happen in hiring someone who has created a perception around themselves through self-promotion.
I like to think of it as hiring a head coach and/or general manager in professional sports. For a team, especially one that is struggling, hiring the right person (or who is perceved to be the right person) can on its own generate increased good press, as well as increased income from an excited fanbase. The big name might cost a lot of money and have very high demands, but it can be worth it if your team can turn the perception into reality, but the short-term gains can become long-term losses if the hire is a failure.
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"Final thought: I just rented Michael Moore's Bowling for Columbine. Frankly, it was the worst sports movie I've ever seen."
--Peter Schmuck, The (Baltimore) Sun
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