Software Detects CEO Emotions to Predict Earnings
Recently I read an article about software that can detect emotions in the faces of CEOs to predict how well their company will do in the future.
James Cicon built software that analyzed video of the faces of Fortune 500 executives for signs of emotions like fear, anger, disgust, and surprise. He scanned hundreds of videos from quarterly reports. The emotions, he found, correlated with profit margins, returns on assets, stock price moves, and other measures of performance at the associated companies.
What surprised me the most about this was that even negative emotions like fear had positive effects on the stock and performance of the company. Dr. Cicon pointed to psychological research from other people: "Fear is widely recognized as a powerful motivator. Thus it is not surprising to find that a CEO who appears fearful under interrogation is perceived by the market as a CEO who will work harder to increase firm value.” So fear from CEOs actually makes their companies do better in the public opinion.
In the future, I think this will be used as a main feature when people decide whether to invest in a company or not.
James Cicon built software that analyzed video of the faces of Fortune 500 executives for signs of emotions like fear, anger, disgust, and surprise. He scanned hundreds of videos from quarterly reports. The emotions, he found, correlated with profit margins, returns on assets, stock price moves, and other measures of performance at the associated companies.
What surprised me the most about this was that even negative emotions like fear had positive effects on the stock and performance of the company. Dr. Cicon pointed to psychological research from other people: "Fear is widely recognized as a powerful motivator. Thus it is not surprising to find that a CEO who appears fearful under interrogation is perceived by the market as a CEO who will work harder to increase firm value.” So fear from CEOs actually makes their companies do better in the public opinion.
In the future, I think this will be used as a main feature when people decide whether to invest in a company or not.
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