Deciphering The CEO Deception Study

So you think the CEO is lying?

Posted Aug 30, 2010

Deciphering the CEO Deception Study − What the Study Said and What we Know

                                              by Joe Navarro

Recently, The Economist published an article entitled “How to tell when your boss is lying,” which received a significant amount of media attention (The Economist August 21, 2010: Page 52). The article was based on a study conducted by David Larcker and Anastasia Zakolyukina of Stanford’s Graduate School of Business entitled: "Detecting Deceptive Discussions in Conference Calls."

The researchers examined the transcripts of 30,000 “Conference Calls” from CFOs and CEOs to determine if deception could be detected from the narrative. They found that when CFOs and CEOs were being deceptive there were certain commonalities that stood out. Specifically they determined that CEOs and CFOs: 

1. Used more general words and fewer specific words.

2. Referred less to shareholder value (probably a legally orchestrated attempt to minimize lawsuits).

3.  Used more extreme superlatives, for example, saying "fantastic" instead of "good."

4. Used “I” less and the third person more.

5. Had less speech errors such as "um" and "ah". 

6.  Swore more often – such as when Enron's Jeff Skilling called a pesky questioner "asshole" after he challenged Skilling's glittering assessment of Enron's financial conditions.

The Economist article on the study was soon followed by articles in the New York Times, The Huffington Post, and The Wall Street Journal, as well as a flurry of blog articles. This prompted me to look closer at the original research and the strength of the findings.

At first glance the findings of the study sound intriguing and for some, no doubt, the aforementioned commonalities found among CEOs and CFOs is disquietingly “ample” ammunition to go out and start accusing people of lying or deception. However, this would be a serious mistake because detecting deception is inherently extremely difficult and research shows us that we are no better than chance at detecting deception (Ekman).

It is helpful to look at the findings of the study and contrast it with previous research by (Burgoon, De Paulo, Ekman, Givens, Navarro, Schafer, Vrij etc.) on deception to help us put this study into perspective.

CEOs, CFOs and the truth

            That CEOs and CFOs lie in conference calls should not come as a shock to anyone. The question is, as narrative analysis expert Jack Schafer would ask, “What are they lying about?”  Are they stretching their optimism, are they hoping things in time will turn around, or are they telling a complete fabrication a la Bernie Madoff? There are lies of obfuscation, concealment, half truths, omission, and so forth, as well as maliciously intentioned mendacity intended to con. What we don’t understand from this study on CEOs and CFOs is what kind of lie they were telling and whether they grouped all forms of lies together.

Who are we actually hearing?

            Conference calls along with the follow up question and answer period are opportunities for companies to champion their organization and try to “shine.” Experience tells us that CEOs and CFOs preparing statements for public consumption (including question and answer periods) have to script these events, and they are influenced by HR personnel, owners, accountants, attorneys, PR consultants and others. Every word is analyzed and worked on beforehand, including the answers to possible questions, not once but many times. What looks like a non-scripted event, is more likely than not, well engineered and rehearsed. Politicians do it in preparation for debates, CEOs and CFOs do the same thing.

            Of the 30,000 “Conference Calls” that were analyzed by the researchers in this study, we actually don’t know which were heavily scripted or to what extent, and how many people were involved. This is a factor because obviously the more people that contribute the more it will affect how and what will be said.

 Third person issues

            The study found that deceptive CEOs tended to use the pronoun “I” less frequently. It is true that deceptive people do tend to distance themselves from things such as when, “my gun” becomes “the gun,” once it is used in a homicide. However, distancing is not in and of itself conclusive of deception. This form of speech, using less “I” or talking about oneself in the third person is often used to infuse neutrality or to formalize a statement. The Queen of England, for example, doesn’t say “I,” she says “We” as in the all too familiar “Royal We” or refers to her Prime Minister as, “her Majesty’s Prime Minister,” again using the third person.

            Executives trying to appear neutral or who are attempting to formalize a statement will speak in the third person. It is a form of speech which is odd to most of us but is not necessarily indicative of deception. That it might be useful psychologically during deception I don’t disagree with, but we must temper that because it is not conclusive of deception. After all, presidential hopeful Bob Dole habitually talked about himself in the third person for no other reason than it just sounded good to him even though it was lampooned frequently.

Clues from the study of rehearsal and influence

            There are inadvertent clues from the study that in fact these conference calls are well planned, well rehearsed, heavily influenced events. The clue comes to us from the researcher’s own findings that deceptive CEOs and CFOs tended to have less speech errors such as “ahhh, uuumm, hum,” and so forth. I find that very compelling evidence of over-orchestration of these “Conference calls” because, as other researchers have found repeatedly − liars tend to have more speech errors not less (Vrij; Navarro). This is very well established both empirically and in the laboratory. That there is an absence of speech errors, as noted by the authors of the study, leads me to believe exactly as I suspect, that these conference calls were scripted, rehearsed, planned, managed, and tweaked along the way so that there would not be any speech errors. But again, rehearsing for a speech or rehearsing answers is merely good preparation, not indicative of deception. Politicians do it all the time. In fact, Winston Churchill, rarely if ever had any speech errors, because, as we later learned, he rehearsed almost everything he ever said, over and over, to make it look like it was extemporaneous.

Emotive Words

            The study also finds that CEOs used terms like “fantastic,” or “awesome” and that should not come as a surprise to anyone. I would expect CEOs to use emotionally vibrant terms, they are, after all, cheerleaders for their company. The Chairman of the Federal Reserve has to weigh almost every word so as to not adversely affect the stock market. But that is not the case for CEOs, they have to be excited about their company and expectations for future earnings.

            In contrast with the CEOs, the researchers found that CFOs showed less exuberance in their choice of language. That too should also not come as a surprise. First of all, CFOs are number crunchers and they are not expected to be the cheerleaders of the business the way the CEO is expected to be. This finding to me is of little forensic significance and I am surprised it even made it into the study; it’s like saying water is wet, true but so what!


            The study also found that deceptive CEOs tended to curse. Calling someone an “asshole,” while objectionable is actually not that odd or revealing. When we consider the level of narcissism in our executives and how society has become more vulgar, this commonality in actuality gives us little comfort or reliance.

            While it is true that using swear words and cursing is a form of aggression, I would not say it is conclusive of deception. What it does suggest is contempt, frustration or stress, but that is all we can really say. In my experience and that of others, the honest and dishonest curse depending on the setting and level of frustration. The more important question to ask, when we hear cursing is, why? Why have they chosen to curse at this moment and what is driving the behavior: circumstances, individuals, topic, etc. Finding out the why is more important than that they did. I would be very reluctant to assess someone as deceptive merely because they curse.

Study Conclusion

            In the study the authors claim that, and I quote here: “. . . our results suggest that linguistic features of CEOs and CFOs in conference call narratives can be used to identify deceptive financial reporting.”  I have no doubt that the researchers truly believe this, however, this is quicksand for the rest of us. If someone were to take what this study has put forward and run with it and accuse a CEO or CFO of being deceptive, attorneys will have a field day with law suits, because they are on weak and flimsy ground with little research to support them. Even if there were no accusations, merely steering individuals away from investing because their suspicions were based on the findings of the above study, they would find themselves without foundation.

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If you are interested in further readings on deception, may I recommend the bibliography below, or you can follow me here on Psychology Today Blogs (Spycatcher) or on Twitter: @navarrotells. Additional information can be obtained through my web site, including a comprehensive, and free, nonverbal bibliography. Joe Navarro is the author of What Every Body is Saying and Louder Than Words. Copyright © 2010, Joe Navarro.


Burgoon, Judee K., David B. Buller and W. Gill Woodall. 1994. Nonverbal Communication: The Unspoken Dialogue. Columbus, Ohio: Greyden Press.

DePaulo, B. M., J. J. Lindsay, B. E. Malone, L. Muhlenbruck, K. Charlton, and H. Cooper. `Cues to Deception.' Psychological Bulletin 129(1) (2003): 74-118.

Ekman, Paul and W.V. Friesen. 1969. Nonverbal leakage and clues to deception. Psychiatry 32: 88-106

Ekman, Paul. 1985. Telling Lies: Clues to Deceit in the Marketplace, Politics, and Marriages.   New York: W.W. Norton & Co.

Givens, David G. 2007. Crime signals: how to spot a criminal before you become a victim. New York: St. Martin’s Press.

Givens, David G. 2005. Love signals: a practical guide to the body language of courtship. New York: St. Martin’s Press.

Givens, David G. 2009. The Nonverbal Dictionary of Gestures, Signs & Body Language Cues. Spokane: Center for Nonverbal Studies (

Navarro, Joe. 2003. A Four Domain Model of Detecting Deception. FBI Law Enforcement Bulletin, (June): 19-24.           

Navarro, Joe and John R. Schafer. 2001. Detecting Deception. FBI Law Enforcement Bulletin, (July): 9-13.

Navarro, Joe. 2010. Louder Than Words. New York: Harper Collins.

Navarro, Joe. 2008. What Every Body Is Saying. New York: Harper Collins.

Navarro, Joe and John R. Schafer. 2003. Universal principles of criminal behavior: a tool for analyzing criminal intent. FBI Law Enforcement Bulletin, (January): 22-24.

Schafer, J. R. (2010). Psychological narrative analysis: A professional method to detect deception in written and oral communications. Springfield, IL: Charles C. Thomas Publisher.

Vrij, Aldert, Katherine Edward, Kim P. Roberts, and Ray Bull. 2000. Detecting Deception via Analysis of Verbal and Nonverbal Behavior. Journal of Nonverbal Behavior 24, (4), Winter 2000: 239-263.

Vrij, Aldert. 2000. Detecting Lies and deceit: the psychology of lying and the implications for professional practice. Chichester, England: John Wiley & Sons, Ltd.

Vrij, Aldert and G.R. Semin. 1996. Lie experts’ beliefs about nonverbal indicators of deception. Journal of Nonverbal Behavior 20: 65-80