Psychopathic traits of corporate leadership as predictors of future stock returns
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2021-10-07
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Abstract
This paper examines whether it is possible to forecast one-year-ahead returns of individual companies based on the observed ‘psychopathic’ characteristics of their top management team. We find that language characteristic of psychopaths present in annual report narratives, questionable integrity, excessive risk-taking and failure to contribute to charitable undertakings tend to reduce future shareholder wealth. These findings imply that firms could benefit from incorporating psychological evaluation in their recruitment processes, especially when seeking to fill senior management posts. While the return predictability described in this paper supports the upper echelons perspective, it simultaneously challenges the notion of informationally efficient stock prices.Citation
Wisniewski, T.P., Yekini, L. and Omar, A., (2019). 'Psychopathic Traits of Corporate Leadership as Predictors of Future Stock Returns'. European Financial Management, pp, 1-47. DOI: 10.1111/eufm.12244.Publisher
WileyJournal
European Financial ManagementDOI
10.2139/ssrn.2984999Additional Links
http://oro.open.ac.uk/57126/https://onlinelibrary.wiley.com/doi/pdf/10.1111/eufm.12244
Type
ArticleLanguage
enISSN
13547798EISSN
1468036Xae974a485f413a2113503eed53cd6c53
10.2139/ssrn.2984999