Market signaling capacity of written and visual charismatic leadership tactics

John Fiset, Erin Oldford and Shaner Chu

Journal of Behavioral and Experimental Finance, 2021, vol. 29, issue C

Abstract: We investigate the market signaling capacity of Chief Executive Officer (CEO) charismatic rhetoric. We rely on signaling theory and embodiment theory of charismatic leadership to develop and test the hypothesis that written and visual charismatic signals have a positive influence on investor signal participation. Evaluating CEO letters of S&P100-listed firms from 2012–2015, we find evidence of the presence and interactive effects of both written and visual charismatic market signals. We also find that written or visual charismatic tactics, when assessed independently, have a counterproductive (negative) influence on investor signal participation. Additionally, CEO compensation acts to amplify the market signaling capacity of the combination of written and visual charismatic signals. This research contributes new insight to the literature on the potential downside to CEO charisma, and thereby provides guidance to those curating CEO messages to external stakeholders.

Keywords: Voluntary disclosures; CEO letters; Charismatic leadership; Signaling theory; Market signaling (search for similar items in EconPapers)
JEL-codes: G34 G40 G41 M41 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:29:y:2021:i:c:s2214635021000095

DOI: 10.1016/j.jbef.2021.100465

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