How does a CEO’s emotional stability influence investors? Binghamton student investigates

Does a CEO’s gender influence how investors perceive his or her behavior? How might that perception affect a company’s public image? And is there a connection between a CEO’s emotional stability and the company’s performance on the stock market?

These questions have formed the backbone of Nan Liang’s research as a PhD student at the Binghamton University School of Management. She’s investigating issues surrounding gender disparities among CEOs — approximately 10.4% of Fortune 500 CEOs are women. So far, she’s found that so-called “neurotic” behavior by men and women in these roles isn’t always negative; it depends mainly on the CEO’s goals for the company and how he or she wants to be portrayed.

“My goal is to figure out whether emotional stability is an important indicator for good CEOs, and if so, to what extent female CEOs are viewed more harshly by investors than male CEOs who demonstrate similar behaviors,” Liang said. “There are indications that neurotic male leaders tend to feel more confident when it comes to taking risks for the company, like mergers and acquisitions, while women who are CEOs appear to be more risk-averse; they tend to work harder to avoid those things and try to lead the company in a way that keeps it more stable.”

Liang is using artificial intelligence programs to analyze data from 800 American companies led by male and female CEOs, particularly the companies’ earnings and the types of statements those CEOs have made, to calculate what she describes as an “average neuroticism score.”

It could be argued, she said, that these executives would want to limit how much emotion they convey in public due to a belief that emotional stability might instill more confidence among investors. Her research also delves into how investors could judge female CEOs more harshly for exhibiting neurotic behaviors than male CEOs under the same circumstances.

If a female-led company in this type of scenario performs strongly but external stakeholders are reluctant to invest, Liang believes this could indicate bias.

“We know these kinds of gender biases exist, but another part of the story I’m trying to uncover is how it goes both ways; it’s commonly held that female leaders have to work twice as hard, maybe harder, than male leaders,” Liang said. “However, men also have a traditional expectation of being confident and strong. If a male CEO projects behaviors that run against that, investors might view that CEO as weak or ineffective.”

Liang’s research draws from her previous work experiences in China’s financial arena. From November 2020 to May 2023, she was a financial planner and labor union team leader at China Securities Company Ltd. in Beijing. Later in 2023, she joined HSBC Bank in Beijing as a relationship manager working in wealth management.

During those years, she became fascinated by how clients were sensitive not only to stock volatility but also to how CEOs were portrayed in media coverage to the public, which could also influence stock performance.

That’s why Liang’s research also hopes to explore how external information, such as media coverage of a CEO’s actions, might influence investors’ opinions and whether gender is a factor in forming that perception.

“After a CEO gives a public speech, it’s very easy to read the coverage in different media and absorb a great deal of information that could make you form an opinion about that CEO’s personality,” Liang said. “Some might argue that personality traits aren’t a big issue, especially if that’s coming from those in middle management or front-line managers, but I would like to find out just how much of an influence it has on those who might form opinions without any direct interactions with that CEO.”

While Liang’s area of study is broad and potentially offers valuable insights into critical factors that can affect today’s business world, her experience with academic research is limited. But that’s why she’s found Binghamton to be such a promising place to start.

Liang struggled to find her footing during her first few months in the School of Management’s doctoral program. She didn’t know how to navigate all the complexities of data analytics or where to find the most reliable sources to guide her research.

What she did have, though, was an idea she was passionate about exploring.

“Every faculty member here is willing to support you, especially when it comes to overcoming your weaker areas, to become even better at whatever you set your mind to,” Liang said. “So, if I were encouraging anyone to apply to this PhD program, I would tell them not to hesitate. The faculty here will help you build the story you are trying to tell.”