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CFO with John Hancock-size signature? You’re a narcissist, study says

It’s only a myth that John Hancock scrawled his famous signature so large so that King George could read it. But a new study says that company leaders trying to replicate Hancock’s efforts with their own autographs might produce financial troubles for their companies.

A working paper from the University of Maryland’s Robert H. Smith School of Business concludes that chief financial officers with larger signatures are more likely to overly inflate earnings and less likely to recognize potential losses, ultimately leading to more financial restatements.

It isn’t a large signature itself that’s the problem. Rather, it’s the signature’s connection to narcissism, a trait that can manifest itself in “big egos, big senses of entitlement and a big need for praise”—as well as similarly big signatures, said Nick Seybert, the Smith accounting professor who co-authored the paper.

The researchers measured the signatures of more than 500 CFOs on notarized documents filed with the Securities and Exchange Commission, judging size by drawing a rectangle around the most extreme points of each one and dividing the area by number of letters.

A pair of laboratory tests established the connection between signature size and narcissism — but only some parts of it.

Narcissism includes seven dimensions, comprising both positive aspects, such as self-sufficiency, and negative aspects, such as exploitativeness. But the laboratory research found that only the negative dimensions are related to signature size.

“We didn’t predict at first that signature size would be related only to the dark elements of narcissism,” Seybert said in a podcast summarizing the findings. “But that’s what we found.”

And the CFOs with larger signatures, on average, exemplified how those dark elements can impact a company’s bottom line.

“CEOS with bigger signatures and more narcissism … go off on their own tangents, focus on their pet projects, take big risks and make big investments that might make them look really good in the end but might not necessarily be good for the company or the shareholders or the employees,” Seybert said.

“The main takeaway is to watch out for a narcissist in a powerful position.”