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NewsTalk

Welcome to the archives for NewsTalk, an IBJ blog published from November 2007 through December 2010.

Tip-offs for when CEOs lie

August 31, 2010

Trust your gut to tell you when someone’s lying, we’re told. Or, in the case of a CEO filling a conference call with hot air, look for key words like “fantastic.”

Two Stanford University business professors have analyzed nearly 30,000 conference call transcripts to see how the use of common euphemisms correlated with later restatements of profits.

“As you know” implies presumptions that aren’t necessarily true. Beware when something is described with over-the-top words like “fantastic.” And be concerned by a lack of “um,” “er,” and other terms that suggest the CEO is thinking about an answer rather than deferring to a coached line.

A summary of the study is on The Economist’s website. The language was used by chief financial officers, too, by the way, not just CEOs.

Now that their cover is officially blown, what do you expect? Perhaps that their investor relations people will step up their game to compensate?

What are your overall thoughts about the trustworthiness of statements made during conference calls? Or anything from C-level offices, for that matter?
 

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