Now here’s an unusual research finding: chief financial officers who pen large signatures on corporate financial statements are “More willing to exploit others and bend the truth in their favor.”
So says a working paper, by Smith accounting professor Nick Seybert and 2015 Smith PhD graduate Charles Ham — along with Mark Lang and Sean Wang from the University of North Carolina at Chapel Hill’s Kenan-Flagler Business School — finds that chief financial officers with large signatures are more willing to exploit others and bend the truth in their favor.
According to their research, the size of CFO signatures on notarized documents filed with the Securities and Exchange Commission predicts the likelihood that companies will inflate their earnings and relax internal controls. “Most importantly,” Seybert says. “Financial restatements are more likely to be needed.”
The researchers were using the signatures as a measure of narcissism.
Ham, a professor at Washington University in St. Louis, says the first barrier to studying the personalities of corporate executives is access. “In an ideal setting, you would be in direct contact with executives and have them take a personality test,” he says. “But that’s not usually possible.”
No silver lining
But that John Hancock on a document is evidence. “A signature comes directly from the executive,” Ham says. “We used two laboratory tests to establish the link between signature size and narcissism.”
Ham says many people consider narcissism an advantage in the C-suite. “When people think of narcissism, their first thought is Steve Jobs,” Ham says. “They think of it as a good trait.” But this research connects signature size only to the dark dimensions of narcissism, such as exploitativeness and authoritativeness. “We’ve looked for that silver lining,” Ham says. “And we haven’t found it.”
The team reached its conclusions after analyzing the signatures of more than 500 CFOs. Researchers simply drew a rectangle around the extreme points of each autograph and measured the area per letter.
Using notarized SEC statements worked well because the documents are public and provide a standardized canvas for comparison purposes. “We controlled for factors such as gender, tenure and corporate history,” Seybert says. “We also measured the size of CEO signatures to determine the interplay — and to see if it was really the CFO driving the oversight process.”
Although CEO narcissism can hurt corporate performance — something the same authors measured in a 2013 study — they found that CFOs have the greatest influence on financial reporting decisions.
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