CEOs’ Human Concern Translates into Higher Stock Price

UZH News — 18 April 2024

Compassionate leadership has tangible benefits: CEOs’ expressions of empathy correlate with positive stock performance, a study led by the University of Zurich shows. The researchers analyzed data from conference calls between CEOs and financial analysts during the COVID-19 pandemic.

During the COVID-19 pandemic, U.S. companies experienced a significant decline in stock market value, surpassing even the 2008-2009 financial crisis. A study by Prof. Dr. Lauren Howe, Prof. Dr. Laura M. Giurge, Prof. Dr. Alexander Wagner, and Prof. Dr. Jochen Menges analyzed CEO conference calls during this period, finding that over half of CEOs expressed care for people. Despite these statements often lacking concrete actions, surprisingly, companies whose CEOs acknowledged the human impact of the pandemic saw better stock prices. Each additional human care statement was associated with a notable increase in cumulative returns, highlighting the importance of CEOs showing humanity in their communications, even in financial contexts.