How to Tell When Your Boss Is Lying: Cool New Study

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!

Comments

[Bomber]

I swear a bit too much (military background). But that has no connection with lying, sorry guys. I am very truthful and strive to never deceive my co-workers, no I am not a boss either. But that is NO measure of lying, the other points I can see. -b

[Davor Milicevic]

Great article. It reminded me of so many affairs with President Clinton, Enron and others. Politics, they are not necessarily lying they are just not telling the truth and avoiding the real answer.

[thomas Cornell]

Is any of this research evidence admissible in a court of law? If not it isn't very good research. Has a single instance of lying in the 30,000 cases studied been reported to legal authorities?

[Eric Schwarzrock]

I like the reference to Jeff Skilling, although according to "The Smartest Guys in the Room" he was already hot tempered.

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[Jacob Kelgard]

What a great find and study. It's truly amazing how deceiving some people can be when they face reality. If given a position of authority, many people have the belief that they are above the law and can do as they wish.

[Patrick]

Mr. Sutton,
What is this study telling us?
Do you think it is very good for development of a company if every employee knows their boss is lying especially when they are in a difficult situation?

[davidburkus]

or strategic, if your strategy is to lie.

[Ellie]

Bob,

Should number 5 say "less" rather than more? I don't have proper internet access at the mo so I can't read the paper to double check for my self, sorry, but when I heard about it elsewhere I thought they said "less" and it fits with the explanation better.

[Bill Bennett]

The business of swearing when lying goes hand-in-hand with something I've observed of asshole behaviour.

I've always viewed bad behaviour as a sign something else is bad - possibly incompetence or dishonesty. The occasional strategically placed swear word is no big deal, but when there's a lot of it going on, I see a smokescreen.

[Johnnie Moore]

What a fascinating find, thanks. BTW I think in point 5 where you say "more" I think you mean "less".

[sk]

Immediately upon reading the title, I was reminded of the political joke I remember hearing too many years ago told of President Johnson (by, I believe, Mort Sahl) concerning the Vietnam War.

How do you tell when your boss is lying?

When he touches his ear, he telling the truth. When he strokes his chin, he is telling the truth. When he opens his mouth, he is lying.

Levity aside, there is a difference between lying and deceptive statements. I have on occasion resorted to making general true statements to avoid full disclosure of something that either 1) an employee did not have the privilege to know; or 2) to avoid speculative discussions about things that might happen because they were distracting to the tasks at hand.

Making a true general statement is not lying. It may be deceptive depending on the eye of the beholder. But, not all deception is unethical.

Given the recent attention ethics has been getting in business, it is good to see research on deception. But, I'd like to see more attention given to the basics of what is and isn't ethical. Everyone knows they shouldn't be abusive (maybe not everyone or your "No Asshole Rule" book wouldn't be necessary), but, in my experience, people often fail to recognize basic ethical grey areas, let alone how to resolve ethical dilemmas.

I'm a bit sensitive on this issue because when I did my MBA (only a few years ago), I pointedly asked the Professor who taught Organizational Behavior and Decision Making why we included no material on ethics. His response was that people have their ethical values formed before they get to Business School and that ethics was not appropriate for the curriculum. (This was something I didn't agree with and might explain why about a quarter of the class was caught up in a cheating scandal that was hushed up by the administration.)

[Eric Riess]

Kind of like swearing in emails at Goldman or in the office - thou ...'dost protest too much, methinks.'
If you need profanity to make a point your point must be pretty weak.