CEOs: Big Signature, Big Narcissist, Big Trouble

Feb. 7, 2013 -- Size does matter, at least where your boss's signature is concerned.

That's the finding of new study that compares the signatures of some 605 CEOs of U.S. firms. The bigger the signature, the authors find, the more likely is he or she is to be a narcissist.

Not only that, the bigger the signature, the more likely the CEO is to run the company into the ground. Ironically, it's also big-signature CEOs who tend to get the highest compensation, regardless of their relatively poor performance.

The study, released by the Kenan-Flagler Business School at the University of North Carolina, is the work of three professors: Charles Ham, Nicholas Seybert and Sean Wang. Its title: "Narcissism is a Bad Sign: CEO Signature Size, Investment, and Performance."

The authors define narcissism as a type of egotism associated with conceit and a disregard for others. Narcissists have a heightened opinion of their own abilities and performance, and, perhaps more importantly, a tendency to belittle or dismiss the abilities of others. They tend to reject or ignore feedback that they get from others.

These qualities can make them bad decision-makers, to the extent that they ignore useful data or valid opinions offered up to them by subordinates.

The authors are not the first to try to measure executive ego, as they acknowledge in their paper. Previous researchers have tried to get a handle on it by, for example, counting the number of personal pronouns used in a company's press releases or by measuring the prominence of the CEO's photograph in the annual report.

The UNC study, however, is the first to focus on signature size, according to its authors. It's also the first to assert a relationship between big signatures and bad decision making: The CEOs whose signatures are largest, they argue, are those most apt to over-spend on R&D or asset acquisition. Their companies, in terms of financial performance, tend to be laggards.

Assistant Professor Wang, one of three authors, tells ABC News that the 605 signatures were obtained, for the most part, from annual reports and proxies filed by S&P 500 companies as of July 2011. These were then subjected to a custom software program to impose a rectangle on each signature and to measure its area. "We standardized the measure by dividing the area by the number letters in the CEO's signature," Wang says.

He says he and his co-authors relied on findings from psychological literature that "a bigger signature means a bigger ego, on average, though other factors may also determine signature size."

Narcissism experts James Westerman and Jacqueline Bergman of Appalachian State University are skeptical of the paper's conclusions for this very reason: Other factors can determine signature size, including, they tell ABC news, high self-esteem and an extroverted personality.

They further question how predictive a CEO's big signature may be of his or her company's performance. If high self-esteem is responsible for that ebullient scrawl, might not the company benefit from his positive self-assurance?

Yes, says Wang, it might. He and his fellow authors are not claiming a one-to-one correspondence between big signatures and badly-run companies. They're simply claiming that on average that relationship holds true.

They cite the following example, which first appeared in Fast Company magazine. Each compares the relative performance of two companies competing in the same industry to the size of the signatures of their respective CEOs:

Michael Dell (Dell) vs. Carly Fiorina (Hewlett-Packard): Fiorina's signature is bigger; HP underperformed Dell by getting a lower return on its investments, according to Fast Company.

Asked what CEO in the study had the biggest signature, Wang tells ABC News it was Timothy Koogle, former CEO of Yahoo. He was CEO from 1995 to 2001, and chairman from 1999 to 2003. Wang, allowing for the fact that Koogle helmed the company "during a relatively strange time"--the rise and fall of the Internet bubble--the professor says he very much fits the model: From '97 to 2001, says Wang, Yahoo paid no dividends, made "extremely high investments," and gave Koogle some of the highest compensation in Silicon Valley.

Therein lays an irony, say the professors: Big-scrawl CEOs, though their companies tend to underperform, get paid more than their little-signature peers. They offer no explanation for that seeming disconnection, other than the speculation that these alleged egotists may be extremely good at sweet-talking and/or intimidating their boards.

Though the authors declined to provide a ranking of CEOs based on their signature research, we couldn't resist asking about real estate mogul Donald Trump, who some might cite as the poster boy for narcissism.

Wang declined to run Trump's seismographic scribble through the narcissizer. "But just looking at it," he said, "I don't think it would score that high. It's liney. There's a lot of up-and-down." That characteristic would reduce its overall score. Referring to the signature's presumed numerical value (not to the Donald's ego), professor Wang said, "It's not huge, relative to others."