Fowler Management Professors Co-Authored Research Wins Best Paper Award

Taekjin Shin, management professor at the Fowler College of Business at San Diego State University, was recently notified that his co-authored research had been awarded “Best Paper” by Corporate Governance: An International Review. The paper, “Changing words: How temporal consistency in a CEO’s use of language toward shareholders and stakeholders affects CEO dismissal”, was published by the journal’s hardcopy version in May 2020. 

Taekjin Shin, Associate Professor, Management Department

Shin and co-author Jihae You of Louisiana State University, studied how the consistency (or inconsistency) in the language used by CEO’s in the media, during speeches and through corporate communications affected their likelihood of job termination. 

“CEOs routinely use language in public settings to manage their firms’ relationship with shareholders and stakeholders,” said Shin. “The language used by the CEO contributes to their public perception and may lead to their dismissal regardless of performance.” 

The researchers found that CEOs who consistently used language indicating that the corporation’s primary objective was maximizing shareholder wealth was perceived more favorably by stakeholders (such as directors and large investors) than when CEOs focused on other corporate issues. Their research indicated the corporate boards were up to 2.3% more likely to dismiss their firms’ CEO based on inconsistent messaging or language that was not favorable to shareholders than those CEOs who offered messaging that consistently signaled a commitment to fulfill their fiduciary responsibilities to shareholders. Examples of this type of language from shareholder letters include:

“Our goal is to use our financial capacity to maximize value for shareholders.” (Time Warner 2003) 

“We must deliver shareholder value.” (Electronic Data Systems, 1998)

“CEO dismissal is a relatively infrequent occurrence, so we examined the messaging over a period of three to five years,” said Shin. “We saw that a one-time expression of shareholder- or stakeholder-oriented language did not have a significant effect. Only when the message was repeated consistently was the effect significant.” 

Note: The authors received no financial support for the research, authorship, or publication of this research.