Empathetic CEOs boost stock prices according to a study

Tagesanzeiger — 18 April 2024

Empathetic CEOs boost stock prices, as shown by a new study from the University of Zurich (UZH). The research, published in the journal "Academy of Management Discoveries," analyzed data from 510 CEO conference calls involving financial analysts and investors from 448 large US companies during the COVID-19 pandemic. Surprisingly, around half (51.8 percent) of the CEOs expressed concern for the well-being of their employees during these calls, even with most of these expressions being generic in nature.

Despite the superficiality of these statements, companies with empathetic CEOs saw better stock performance compared to those whose CEOs didn't address the pandemic's impact. Each instance of expressing care for people was associated with a significant increase in cumulative returns, indicating the financial benefits of a compassionate leadership style. The findings underscore the importance of CEOs demonstrating humanity in their communications, even in contexts traditionally focused on financial performance, suggesting that such expressions influence investor perceptions of risk.