Last but not least: "Junk words" can expose liars
Managers who present manipulated financial reports often use the personal pronoun «we,» thereby arousing suspicion. This is the conclusion reached by researchers at Stanford University, who analyzed transcripts of nearly 30,000 corporate conference calls from 2003 to 2007.
According to the researchers, the use of "we" instead of "I" means that the managers are relieving themselves of some of the personal responsibility for what they say. Another indication that board members are not speaking the truth, according to the survey, is the use of many so-called "junk words", which are strongly charged with emotion. According to economics professors David Larcker and Anastasia Zakolyukina, the case of Lehman Brothers is an apt example of this. A few months before the collapse in September 2008, CFO Eric Callan used the word "great" 14 times, "strong" 24 times and "incredible" eight times.
According to the press release, the study, which has not yet been published, is intended to help analysts predict risks for investors even if a company's figures have been deliberately falsified. However, whether one can actually conclude a lie from the choice of words in an individual case depends on various factors and is not easy to determine - the probability of incorrect statements by management is always particularly high when emotionally colored words are hardly accompanied by actual strong figures, according to the researchers. I see. So, for example, if the manager talks about an "incredibly strong and great result" and this statement is accompanied by figures in the six-digit minus range, is this a lie?
According to the press release, the study, which has not yet been published, is intended to help analysts predict risks for investors even if a company's figures have been deliberately falsified. However, whether one can actually conclude a lie from the choice of words in an individual case depends on various factors and is not easy to determine - the probability of incorrect statements by management is always particularly high when emotionally colored words are hardly accompanied by actual strong figures, according to the researchers. I see. So, for example, if the manager talks about an "incredibly strong and great result" and this statement is accompanied by figures in the six-digit minus range, is this a lie?
