To answer this question effectively, CEOs should look at how they currently engage with customers, and momentarily ignore the whole “social media” aspect of the discussion. If a CEO regularly communicates with customers, regardless of company size or industry, then social media can be an effective means to increase the immediacy, reach and impact of such communications. If a CEO is in an industry where this is not expected, or where this has caused problems or negative perceptions in the past, social media will do nothing to erase those concerns, and can often accentuate the negative.
Despite a chorus or pundits proclaiming otherwise, social media is just another channel to communicate with your customers. If communication between the CEO and customers is largely beneficial today, then social media is another arrow in your quiver for tomorrow. If the CEO does not interact with customers for personal, political, legal or other reasons, social media should not trigger you to abandon that rationale without good reason.