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A crystal ball that revealed to investors how their stocks and shares were going to perform in the market would be a welcome gift for many. Now researchers at the Fuqua School of Business at Duke University have discovered, if not a window into the future then at least a tiny glimpse.
After analysing the voices of approximately 700 chief executive officers and chief financial officers Mohan Venkatachalam, a professor of accounting and William Mayew, an associate professor of accounting have discovered that hints about a company’s future performance lie in an executive’s voice.
The duo monitored the voices of the executives during earnings conference calls, using vocal emotion analysis software. They discovered that a positive emotional state - an excited voice - corresponded with a favourable stock market and unexpected future earnings were higher. However the opposite also held true, with a negative emotional state - such as putting a positive spin on financial data even though the underlying figures were not that good - being viewed as bad news.
“The more negative the emotional state, the lower the future stock returns, “ says Prof Venkatachalam.
The co-authors believe that voice analysis will in time become a useful tool for investors and analysts and will be used to identify both financial success and failure.
“We have preliminary results from follow-up work showing a very strong association between negative emotions and the likelihood of misreporting,” adds Prof Venkatachalam.
The paper, The power of voice: managerial affective states and future firm performance, is published in the Journal of Finance.
● The skills that used to make executives stand out - technical expertise and functional competence - are no longer as important as they once were.
A faculty member at Harvard Business School, together with two consultants from an executive search company, have discovered that business know how and “soft leadership skills” are what counts today.
In their research, The new path to the C-suite, published in the Harvard Business Review, HBS assistant professor Boris Groysberg, with co-authors Kevin Kelly and Bryan MacDonald from Heidrick & Struggles, believe that traditional skills are now very much “the bare minimum”.
Today’s executive they say needs to be “ a good communicator, a collaborator and a strategic thinker,” who is team focused and has an ability to multi-task. The researchers suggest that the trend they have identified towards a general business orientation over a functional one will continue and they cite the words of one executive recruiter who states that “we are looking at a whole new breed of top executive”.
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