Language as a marker of CEO transition and company performance

An increasing number of researchers are beginning to explore leadership effectiveness in the context of language. To gain a better understanding of what constitutes an effective leader, particularly in the context of transition (exiting or entering leadership role), the current project examined Chief Executive Officer (CEO) language use in quarterly conference calls and its' association with company performance. Three research questions were asked: 1) What language patterns are associated with an outgoing CEO versus an incoming CEO? 2) To what degree does CEO language change depending on whether company performance increases or decreases in the year prior to exiting tenure or subsequent to their entering tenure 3) To what degree does CEO language predict company performance and company performance predict language use? In order to answer these questions, language use in the question and answer portion of quarterly conference calls was examined for 215 companies in the year prior to old CEO departure and in the first year for new CEO. Computerized text analysis was used to examine language associated with self-focus, other-focus, and positive and negative affect. Results suggest that old and new CEOs use distinctive language patterns when they are entering and exiting their leadership positions. Language was found to predict company performance and company performance was found to predict language. The current project points to the power of language as a tool to explore leadership effectiveness in the context of transition. Specifically, language analysis can help identify degree of old CEO detachment and new CEO assimilation within their company. In addition, language can be used as a marker of company performance.