How Big Is Your Signature?

I’ll bet you never thought that the size of your signature meant a darned thing.  But guess what.  It does.

A recent study by a business school professor at Washington University in St. Louis found that an oversized signature is correlated with an oversized ego, and a great big ego can have practical business consequences.

In my view, the research findings apply to people running enterprises in a whole lot of areas other than corporations, including the White House.

The research by Professor Chad Ham, a professor at Wash U’s Olin Business School, concluded that a CFO (chief financial officer) with an oversized signature is more likely to make questionable choices because of his/her oversized ego.

Professor Ham’s research, described in a paper published in the December issue of the Journal of Accounting Research, showed that “narcissistic CFOs are less likely to recognize losses” promptly, and that this behavior is “consistent with a willingness to cover up past mistakes.”

Ham’s research team, which included academics from the University of North Carolina, the University of Maryland, and Rice University, looked at the size of a CFO’s signature and how it related to his/her level of narcissism. They then connected those findings to the financial reporting by each CFO’s corporation.

The research team compared the performance of the companies before and after the CFO was appointed.  The result was telling.  The firms became “more aggressive” when narcissistic CFOs were appointed.

Ham’s research went beyond that of CFOs.  It also looked at CEOs and linked management results with their level of narcissism.  Narcissistic CEOs—those with larger signatures—tended to over-invest in riskier projects and received higher compensation despite poor financial performance.

Why did the researchers focus so much on signature size?  According to Ham, it was one way to “capture narcissism.”  They couldn’t simply ask top corporate executives to submit to a personality test.  So they used signature size as a proxy for the level of narcissism.

In other research, the team paired student volunteers, and asked them to allocate $5 between themselves and their anonymous partners.   After that assignment, the students had to fill out a personality test and sign their names.  The result?  Students with larger signatures tended to be more narcissistic, and the more narcissistic participants were more likely to keep a larger share of the $5 for themselves and to misreport how they allocated the other half of that amount.

Ham doesn’t advocate that corporate boards avoid hiring as CEOs and CFOs everyone with a large signature.  It’s not that simple.  A single narcissistic CFO might benefit the company in ways not measured in this study.  But Ham concluded that corporate leaders should be aware of their colleagues’ narcissistic tendencies in order to keep “appropriate checks and balances in place.”

Wow.  I think this research can be extrapolated to the heads of entities other than corporations.  For example, the current occupant of the White House likes to show off his oversized signature on whatever documents he signs.  His large signature is just one indication of his level of narcissism, which is related to his eagerness to embark in risky projects, to misreport how he allocates funds, and to cover up his past mistakes.

As for keeping appropriate “checks and balances in place,” we might as well forget it.  Where are the other leaders of our government—in particular, those currently belonging to the majority party in Congress–who could exhibit some strength of character and insist that “checks and balances,” a long-held principle of our democracy, are observed?

They’re nowhere to be found.

I’m wondering just how big their signatures are.