CEO hubris as a ‘sell’ signal for investors. (2013)

“We could analyze the speech patterns of corporate and government leaders and measure whether they have stepped over the edge of narcissism and lost touch with the realities of their business

Art Chester, former research scientist, CTO and lab president.
Personal blog Artchester.net, 27 September 2013

It’s a ‘science fact’ that CEO hubris may predict bumpy times ahead for shares in the company they lead, writes Chester. He bases his conclusion on two recent  studies publicised in the Financial Times (also available elsewhere on our Daedalus Trust site). One analysed the speech patterns of three British Prime Ministers, while the other reviewed the letters to shareholders from the CEO of a bank that over-expanded during the banking boom then suffered immense losses.

“What’s fascinating is the idea that we could analyze the speech patterns of corporate and government leaders and measure whether they have stepped over the edge of narcissism and lost touch with the realities of their business.”

Chester concludes his blog with a fascinating quote from Warren Buffet: “many managers apparently were overexposed in impressionable childhood years to the story in which the imprisoned handsome prince is released from a toad’s body by a kiss from a beautiful princess. Consequently, they are certain their managerial kiss will do wonders for the profitability of the companies they intend to acquire.

“We’ve observed many kisses but very few miracles. Nevertheless, many managerial princesses remain serenely confident about the future potency of their kisses – even after their corporate backyards are knee-deep in unresponsive toads.”

Read the full blog here: CEO hubris as a ‘sell’ signal for investors

Also see

Linguistic biomarkers of Hubris syndrome

Executive hubris: the case of a bank CEO. (2013)