1:56 pm July 22, 2009, by Henry Unger
Words matter in business.
New CEOs that use charismatic language in their first letters to shareholders are more likely to gain higher recommendations for their company’s stock from securities analysts, according to a new study by three researchers.
What’s more, the study said the analyst recommendations turned out to be wrong more often, according to a Penn State University news release.
Charismatic language, the release said, tends to be very critical of the past and uses moral, ideological and emotional overtones when discussing future goals.
The research was conducted by Vilmos Misangyi, of Penn State University’s Smeal College of Business, Angelo Fanelli of HEC School of Management and Henry Tosi of the University of Florida. Their paper, “In Charisma We Trust: The Effects of CEO Charismatic Visions on Securities Analysts,” is forthcoming in Organization Science.
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