Cast your mind back to Steve ‘Boogie’ Ballmer dancing before thousands of Microsoft employees, Tesla frontman Elon Musk smoking pot on Joe Rogan’s podcast, and PayPal co-founder Peter Thiel suggesting that he transfuse teen blood into his own body. These are not cookie-cutter CEOs!
These days, the less bothered about Wall Street protocol, the more charismatic. The less concerned with textbook techniques, the more likely to receive a call from desperate companies in need of a White Knight. But can charisma alone move stocks? Psychologists writing in the Harvard Business Review believe it can.
In studying the personality traits of over 1,500 CEOs on the S&P, researchers found neurotic and extroverted leaders adding around two-and-a-half percent more volatility to a firm’s stock price. Analyst accounts do suggest a premium awarded for free spirits at the top, but when risk escalates, investors tend to flee. If challenges arise for a company directed by an introvert, however, markets rise to those challenges, embrace a bullish sentiment, and returns increase 5%. This is not what the gurus expected!
So, Tesla’s board ought to usurp Elon Musk’s Twitter account? Not so fast! Magnetic managers make the highs higher and the lows lower in the short-term, but it’s a different story over the long-term. One-off leaders have a habit of attracting talent, leading people toward audacious goals, and devising business empires built to last. Buckle up, though, it could be a rollercoaster!