It's wrong for an infinite string of Data Loss reasons, uncontrolled access to cloud services is no different than leaving a laptop filled with confidential information lying in the front seat of your car.
It doesn't matter how secure the user thinks it is, nobody in Security or Risk Management has qualified or quantified the risk.
To say that Executives would rather stifle productivity is false, they will get the appropriate tools for the job for their workers, that has never been the issue at any organization I've worked for directly, or consulted for.
The real reason nobody cracks down on this, is kind of ironic, although the executives know it's going on, and they will chastise or have you written up for breaking policy/procedure, the truth is that they don't really know what their security posture is and they don't want to know for liability reasons.
There's a lot of willful ignorance, because Security in IT truly is a giant black hole cost center to these people, and rather than seeing it as protective measure, they see it as something that stifles productivity and costs enormous amounts of money.