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Firm Performance in the Face of Fear: How CEO Moods Affect Firm Performance

Author

Listed:
  • Ali Akansu
  • James Cicon
  • Stephen P. Ferris
  • Yanjia Sun

Abstract

The authors use facial emotion recognition software to quantify CEO mood. Anger or disgust motivates a CEO to work harder to improve his or her situation; thus firm profitability improves in the subsequent quarter. Happy CEOs are less likely to work on hard or unpleasant tasks; thus profitability decreases in the subsequent quarter. In the short term, fear explains the firm's announcement period market performance. However, fear is transient and performance improvement is short term.

Suggested Citation

  • Ali Akansu & James Cicon & Stephen P. Ferris & Yanjia Sun, 2017. "Firm Performance in the Face of Fear: How CEO Moods Affect Firm Performance," Journal of Behavioral Finance, Taylor & Francis Journals, vol. 18(4), pages 373-389, October.
    • Handle: RePEc:taf:hbhfxx:v:18:y:2017:i:4:p:373-389
    DOI: 10.1080/15427560.2017.1338704
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    Cited by:

    1. Wang, Qiping & Yiu Keung Lau, Raymond & Xie, Haoran & Liu, Hongyan & Guo, Xunhua, 2024. "Social Executives’ emotions and firm value: An empirical study enhanced by cognitive analytics," Journal of Business Research, Elsevier, vol. 175(C).
    2. Curti, Filippo & Kazinnik, Sophia, 2023. "Let's face it: Quantifying the impact of nonverbal communication in FOMC press conferences," Journal of Monetary Economics, Elsevier, vol. 139(C), pages 110-126.
    3. Hoang, Daniel & Wiegratz, Kevin, 2022. "Machine learning methods in finance: Recent applications and prospects," Working Paper Series in Economics 158, Karlsruhe Institute of Technology (KIT), Department of Economics and Management.
    4. Teklay, Belaynesh & Yu, Wei & Zhu, Keying, 2024. "The effect of superstitious beliefs on corporate investment efficiency: evidence from China," International Review of Economics & Finance, Elsevier, vol. 92(C), pages 1434-1447.
    5. Neugebauer, Frederik & Russnak, Jan & Zimmermann, Lilli & Camarero Garcia, Sebastian, 2024. "Effects of the ECB’s communication on government bond spreads," Journal of International Money and Finance, Elsevier, vol. 142(C).
    6. Mestiri, Sami, 2023. "How to use machine learning in finance," MPRA Paper 120045, University Library of Munich, Germany.
    7. Rilwan Sakariyahu & Mohamed Sherif & Audrey Paterson & Eleni Chatzivgeri, 2021. "Sentiment‐Apt investors and UK sector returns," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 3321-3351, July.
    8. Sakariyahu, Rilwan & Johan, Sofia & Lawal, Rodiat & Paterson, Audrey & Chatzivgeri, Eleni, 2023. "Dynamic connectedness between investors’ sentiment and asset prices: A comparison between major markets in Europe and USA," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 89(C).
    9. Liu, Eping & Qin, Haoyuan, 2024. "Can managers’ facial expressions predict future company performance and risk? Evidence from China," Finance Research Letters, Elsevier, vol. 59(C).
    10. Mestiri, Sami, 2024. "Financial applications of machine learning using R software," MPRA Paper 119998, University Library of Munich, Germany.

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