Donald Trump's signature.
Donald Trump's signature.

London - The bigger a chief executive’s signature the more likely he or she is to be a narcissist, a new study claims. The research which compared the signatures of some 605 chief executives of US firms found that size does matter where boss’s autographs are concerned.

It found that bosses with bigger signatures also tended to get the highest pay, but were in fact more likely to run their companies into the ground.

The study by academics at the Kenan-Flagler Business School at the University of North Carolina took the signatures of chief executives from company accounts filings with the US Securities and Exchange Commission.

The authors identify narcissism as an egotistical character trait “associated with conceit and disregard for others”.

“Similarly, narcissism creates biased self-perception in the form of upwardly biased evaluation of one’s own abilities and performance,” they say in the paper.

These qualities make them bad decision-makers, the study says, but enable them to convince directors and shareholders of their competence to the extent that they get better pay.

Professor Sean Wang, one of three authors of the study, said the 605 signatures analysed were found largely on annual reports and other documents filed by S&P 500 companies from July 2011.

Signatures were fed into a computer program which measured the area they covered.

“We standardised the measure by dividing the area by the number of letters in the CEO’s signature,” Wang said.

Wang said he and his co-authors relied on findings from previous psychological studies which claimed that bigger signatures mean bigger egos.

Using the size of the signature as a proxy for the writers’ narcissism, they found that “narcissistic CEOs invest more in capital expenditures and acquisitions but pay lower dividends, with over-investments being largest in magnitude when financial slack is high.

“In addition, narcissistic CEOs exhibit worse performance as measured by the contemporaneous return on assets, with the effects being largest when operating environments are most uncertain.

“Despite the negative relationship between narcissism and firm performance, these CEOs receive higher cash and stock compensation, as well as higher compensation relative to the next highest paid executive at their firm.”

Other experts where sceptical of the paper’s conclusions because of its assumption that a larger signature correlates to a bigger ego.

James Westerman and Jacqueline Bergman of Appalachian State University said other factors could determine signature size, including high self-esteem and an extroverted personality.

They also said that if high self-esteem was what lay behind a company boss’s oversized autograph, the firm could benefit from such positive self-assurance.

Wang countered that he and his colleagues did not claim to have found a one-to-one correspondence between large signatures and badly run companies, merely that the relationship held true on average.

To illustrate the point the researchers compared the relative performance of two companies competing in the same industry to the size of their chief executives’ signatures.

Dell boss Michael Dell has a smaller scribble than Hewlett Packard boss Carly Fiorina, and HP underperformed Dell by getting a lower return on its investments.

Wang told ABC that the chief executive they studied with the biggest signature was Timothy Koogle, former boss of Yahoo as chief executive between 1995 and 2001, and chairman between 1999 and 2003.

Even allowing for the fact that Koogle led Yahoo during the rise and fall of the internet bubble, the professor said he fitted their model.

From 1997 to 2001, Yahoo paid no dividends, made “extremely high investments” and gave Koogle some of the highest pay of any Silicon Valley boss. – Daily Mail