Can we spot CEO's risky corporate policies by analyzing their language?

What is it about?

Before being a company's key decision maker, a CEO is a human being. Thus, as all of us, her/his personality can impact her/his decision making process, to such an extent that CEOs specific characteristics can explain firm-level variations and outcomes that even traditional, financial and environmental determinants fail to explain. However, it is hard to collect personality insights from CEOs through traditional questionnaires: it is time and money consuming, and they will probably try to hide the truth. That's why we try collect it from their spoken language, looking for cues of a future focused language as a potential signal of forward-looking mindsets and risk-averse decision making.

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Photo by Hunters Race on Unsplash

Photo by Hunters Race on Unsplash

Why is it important?

Leadership style represents both a practical problem and a theoretical problem. Individuals' perception of time has a strong impact on attitudes, behavior and strategic decision making, on a wide range of life contexts, including the working environment and work-related outcomes. As it happens with extreme “dark” personality markers, specific temporal preferences might however lead to decision-making and behaviors that, on the long run, become harmful for the organization as a whole. Measuring CEOs temporal preference might help a prompt identification of extreme unbalanced TMT profiles and, in turn, help mitigate the potential risk of having a leader whose behavior could turn out to be destructive for the financial status of the company.