Empathetic bosses boost share prices, according to a study
Published: Thursday, Apr 18th 2024, 12:11
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Companies with empathetic bosses have higher share prices. This is the finding of a new study by the University of Zurich (UZH). According to the study, even superficial expressions of concern for the well-being of fellow human beings lead to an increase in returns.
A caring management style therefore pays off, UZH said in a statement on Thursday.
For the study, which was published in the journal "Academy of Management Discoveries", the researchers analyzed data from 510 conference calls between CEOs and financial analysts and investors from 448 large US companies during the coronavirus pandemic.
Around half (51.8 percent) of the bosses emphasized their concern for the well-being of their employees. According to the researchers, most of these expressions of concern were generic statements. As an example, the university quoted one CEO as saying: "First of all, I would like to emphasize that the safety of our employees, partners and customers is our top priority."
Researchers initially surprised
Nevertheless, the share prices of these companies performed better than those of companies whose CEOs did not comment on the impact of the pandemic, as the researchers wrote. Specifically, according to the study, a statement of concern was associated with an increase in cumulative returns of 2.49 percentage points.
This came as a surprise to the researchers. "At first glance, these statements appear to be of little relevance to financial analysts and should therefore not influence them," first author Lauren Howe was quoted as saying in the UZH press release. However, it is quite plausible that company shares would be assessed as less risky based on such statements.
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