Computer programs have been created to scan facial expressions that help determine how people respond to commercials, or whether or not hospital patients are in pain. James Cicon, a finance professor at the University of Central Missouri, constructed a software that he used to help analyze the faces of Fortune 500 executives. Cicon and his software analyze the executives for signs of different emotions such as fear, anger, disgust, and surprise which he found had a correlation to critical data. According to The Wall Street Journal, “The emotions related to the companies’ profit margins, return on assets, stock price moves, and other measures of performance” (Dwoskin).
Dr. Cicon and his colleagues scanned the faces of more than 200 CEOs and former CEOs of companies including Citigroup, ConAgra Foods, FedEx, and Macys. They determined that emotions such as fear, anger, disgust—even though they are negative—correlate positively with financial performance. The results show, “Signals of disgust as shown by lowered eyebrows and eyes, and a closed, tightened mouth, were associated with a 9.3% boost in overall profits in the ensuing quarter” (Dwoskin). Additionally, “Dr. Cicon found that CEO’s who expressed signs of fear with raised eyebrows, widened eyes and mouth, and lips that were pulled in at the corners saw their companies’ stock price rise .4% in the following week” (Dwoskin). Cicon related his finding to psychological research done by Steve Ferris and Ali Akansu that states, “Fear is widely recognized as a powerful motivator.” Cicon finds that CEO’s that appear fearful under interrogation will work harder to increase their firm’s value.
A software such as the one that Dr. Cicon created allows investors to better predict the market and the future of their investments. This software has the potential to change the way people analyze firms in the market and assess their future earnings and growth. Financial and market analysts are constantly looking to improve their predictions and enable a higher percent of accuracy to limit the amount of volatility and instability of the market place. A software such as this also has the potential to more accurately understand what CEOs are actually thinking which will have an effect of the market value of a firm. For instance, Dr. Cicon is hoping to teach the software to measure degrees of sincerity and truthfulness to help determine the validity of executive’s statements.
Conversely, there are many faults and future problems that can come as a result of people utilizing a software such as the one Dr. Cicon created. Dr. Ekman, the psychologist whose research to analyze emotions based on facial expressions, that Dr. Cicon traced his software back to claimed 90% accuracy for his emotion-coding system. This makes accuracy a concern for Cicon’s software and the potential for the results to be misused. Dr. Ekman suggested, “A misinterpreted emotion on a CEO’s face, for instance, might contribute to market swings that cause a company to lose or gain value based on spurious information.” Personally, I think that facial expressions could be misleading and if technology like this emerged, CEOs would find ways to hide their true feelings in a way that can go undetected by the software.
Dwoskin, Elizabeth. "Software Detects CEO Emotions, Predicts Financial Performance." Digits RSS. Wall Street Journal, 17 Feb. 2016. Web. 22 Feb. 2016. <http://blogs.wsj.com/digits/2016/02/17/software-detects-ceo-emotions-predicts-financial-performance/?mod=ST1>.