Tell-tale Signs of CEO Lies

Stanford University researchers picked up clues about whether the CEO was being candid during the question and answer portion of earnings calls for their study, “Detecting Deceptive Discussions in Conference Calls.”

The Tells

Not answering the question. One example was an interview with Computer Associates CEO Sanjay Kumar, who ended up in prison for securities fraud. The question asked during the interview was essentially “Can your books be trusted?”

Instead of saying yes, Kumar deflected the question by rattling off the credentials of the people who ran his company’s audit and governance committees.

“We” and “our team.” The researchers dug through transcripts of thousands of conference calls and then studied the language executives used when they had to restate earnings. They found that lying CEOs and chief financial officers overused words like “we” and “our team” instead of words that would imply personal responsibility, like “I.”

Emphasizing the positive. Researchers said lying CEOs tend to overcompensate for what they know is going on behind the scenes by using a lot of words that express positive emotion. When Enron CEO Kenneth Lay addressed employees right before the company was about to implode, he highlighted the positive (and ignored the negative). Practically every other word out of his mouth was “extremely” or “very.” If it sounds like hype, it probably is.

“You know.”CEOs and CFOs use more words that reference general knowledge such as “you know” in deceptive instances.

The Takeaways

We think these red flags are applicable to any type of interview situation or when you’re speaking in front of a group. And these clues probably aren’t unique to C-suite executives. Other managers can give off similar “tells.”

We recommend that you record your presentations—either audio or video—in advance and listen for any of these clues. Most people don’t realize how many times they say “you know” as a filler until they play it back. You’re goal is to be credible and believable—even if the news isn’t so great. It’s also helpful to have someone you trust give you honest feedback.

The point is not to learn how to lie better—we would never advise that. Just know that people are listening to what you say and how you say it. You want to make sure to come across as the credible, honest person you are.

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