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The Handwriting is on Wall Street: CEO Scribbling Significance?

Business analysts struggle to find reliable ways to make any sense of the great mystery: Which firms will thrive, and which wither? This new study, perhaps as reliable as most business indicators, looks at the size of the chief executive’s handwriting:

SeybertNickNarcissism is a Bad Sign: CEO Signature Size, Investment, and Performance,” Charles Ham, Nicholas Seybert [pictured here] and Sean Wang, March 19, 2013, UNC Kenan-Flagler Research Paper No. 2013-1. The authors explain:

“Using the size of the CEO signature on annual SEC filings to measure CEO narcissism, we find that narcissism is positively associated with several measures of firm overinvestment, yet lower patent count and patent citation frequency. Abnormally high investment by narcissists predicts lower future revenues and lower sales growth. Narcissistic CEOs also deliver worse current performance as measured by return on assets, particularly for firms in early life-cycle stages and with uncertain operating environments, where a CEO’s decisions are most likely to impact the firm’s future value. Despite these negative performance indicators, more narcissistic CEOs enjoy higher compensation, both unconditionally and relative to the next highest paid executive at their firm.”

Harvard Business Review interviews the middle author.

A press release confirms the importance of the research.

(Thanks to investigator Erwin Kompanje for bringing this to our attention.)

BONUS: A different Charles Ham looks at the writings — but not the writing — of the poet Ovid

Improbable Research