From: The Wall Street Journal

Software Detects CEO Emotions, Predicts Financial Performance

The Wall Street Journal:

Computer programs that scan facial expressions have been used to detect whether people respond positively to commercials or whether hospital patients are in pain. Can they also read a CEO’s mind?

James Cicon thinks they can. A finance professor at University of Central Missouri, Cicon built software that analyzed video of the faces of Fortune 500 executives for signs of emotions like fear, anger, disgust, and surprise. The emotions, he found, correlated with profit margins, returns on assets, stock price moves, and other measures of performance at the associated companies.

Dr. Cicon’s results are scheduled to be published by the Journal of Behavioral Finance in a forthcoming peer-reviewed paper. They could be of interest to investors, analysts, and journalists, he said. Investors, in particular, have long parsed CEO statements for clues to the executives’ state of mind.

However, accuracy is an issue. Dr. Ekman claimed 90% accuracy for his emotion-coding system, but software inspired by his work hasn’t been tested independently.

Dr. Ekman himself recently expressed concern that tools based on his work run a risk of misuse. A misinterpreted emotion on a CEO’s face, for instance, might contribute to market swings that causing a company to lose or gain value based on spurious information.

Read the whole story: The Wall Street Journal

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