Psychopathic Traits of Corporate Leadership as Predictors of Future Stock Returns

Ayman Omar, Tomasz Piotr Wisniewski, Sina Yekini

Research output: Contribution to journalArticle

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.
Original languageEnglish
Article number5
Pages (from-to)(In-press)
Number of pages47
JournalEuropean Financial Management
Volume(In-press)
Publication statusAccepted/In press - 29 Oct 2018

Fingerprint

Stock returns
Predictors
Evaluation
Upper echelons
Psychological
Stock prices
Integrity
Language
Top management teams
Annual reports
Risk taking
Shareholder wealth
Senior management
Return predictability

Keywords

  • Corporate Psychopaths
  • Stock Market Returns
  • Shareholders’ Wealth
  • Behavioral Finance

Cite this

Omar, A., Wisniewski, T. P., & Yekini, S. (Accepted/In press). Psychopathic Traits of Corporate Leadership as Predictors of Future Stock Returns. European Financial Management, (In-press), (In-press). [5].

Psychopathic Traits of Corporate Leadership as Predictors of Future Stock Returns. / Omar, Ayman; Wisniewski, Tomasz Piotr; Yekini, Sina.

In: European Financial Management, Vol. (In-press), 5, 29.10.2018, p. (In-press).

Research output: Contribution to journalArticle

Omar, A, Wisniewski, TP & Yekini, S 2018, 'Psychopathic Traits of Corporate Leadership as Predictors of Future Stock Returns' European Financial Management, vol. (In-press), 5, pp. (In-press).
Omar A, Wisniewski TP, Yekini S. Psychopathic Traits of Corporate Leadership as Predictors of Future Stock Returns. European Financial Management. 2018 Oct 29;(In-press):(In-press). 5.
Omar, Ayman ; Wisniewski, Tomasz Piotr ; Yekini, Sina. / Psychopathic Traits of Corporate Leadership as Predictors of Future Stock Returns. In: European Financial Management. 2018 ; Vol. (In-press). pp. (In-press).
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