The most recent Economist summarizes a fascinating study by two researchers over at the Stanford Business School — Professor David Larker and PhD Student Anastasia Zakolyukina — based on transcripts of American CEOs and CFOs statements during 30,000 quarterly earnings conference calls between 2003 and 2007. Yes, 30,000! They linked the language that bosses used in these conference calls to whether or not the firms later "materially restated their earnings." Their paper is called "Detecting Deceptive Conversations in Conference Calls" (here is the pdf) and they found some interesting patterns — based on research on detecting lies — that predicted apparent deception by the CEOs and CFOs:
1. They used more general words and fewer specific words.
2. Referred less to shareholder value (perhaps to minimize lawsuits).
3. Use more extreme superlatives, for example, saying "fantastic" instead of "good" (apparently in an attempt to bullshit more effectively).
4. They use "I" less and the third person more — to distance themselves from the deception, it appears.
5. They say "um" and "ah" less — because, the authors hypothesize, they have rehearsed their lies.
6. They swear more — in fact, the Economist article starts with the famous case where Enron's Jeff Skilling called an investor an "asshole" after he challenged Skilling's positive assessment of Enron's financial conditions.
The Economist doesn't say why the liars swore more — I would guess that it is because people who are lying are more tense and emotionally and cognitively overloaded and that inner leaks or, in Skilling's case, floods out. In the article, the authors suggest that swearing is part of a pattern of anger that goes with lying, and that makes sense and is related.
I have written and talked about the strategic use of swearing in the workplace. But after the publication of this delightful study, I suspect that swearing during earnings calls will be seen as a distinctly non-strategic behavior!
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