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How to Tell if a CEO is Lying
By JLP | June 25, 2006
That is the topic of this week’s cover story in Barron’s. It is very interesting. I wish the story was available to the public free of charge but it’s not.
The article highlights a company by the name of Business Intelligence Advisors (BIA), “which employs a number of former CIA and other national-security operatives to do behavioral analyses of corporate executives.” Their goal is to detect when company executives are being less-than-truthful (in other words LYING!).
Here’s what they look for:
1. They try to gauge whether managers definitively and directly answer questions and forthrightly address issues, rather than tap dance around the subjects. They look for “protest” statements rather than firm denials. Examples of this would be the following statements we hear over and over again from executives:
“We have an experienced management team in place.”
“Our business is extremely complex.” (Sounds like something Jeffrey Skilling from Enron would have said.)
So the next time you hear an executive say something like this, you can think to yourself “BS.”
2. They look for management replies larded with irrelevant specifics, meant to obscure some troubling issue.
3. They look for words and phrases like “honestly” and “to tell you the truth.” Anytime a person has to tell you they are honest, they AIN’T honest!
4. They look for executive attacks on accusers. This too reminds me of Jeffrey Skilling.
5. They look for nonverbal behavior like lack of eye contact and other nervous movements.
Anyway, I thought it was a pretty interesting article. Securities analysts and hedge fund managers have hired BIA to investigate different executives. If these techniques are successful, I bet we’ll see executives ban all cameras from meetings!
Topics: Investing | 1 Comment »
June 26th, 2006 at 9:06 am
How to tell if a CEO is lying? Is “his lips are moving” too harsh?
Seriously, I try to use the same BS-o-meter I use with all other situations. And vague statements like the one you listed are pretty good indicators.