Do Executive Accents Matter?

WHEN INVESTING in a company, many factors come into play. Company performance and overall market sentiment are critical. Equally important is investor belief in a CEO’s abilities. But how does a CEO’s accent influence potential investment? Do CEOs with foreign accents fare better or worse with shareholders?

Schaefer Chaired Professor of Accounting Kathryn Kadous and Leonardo Barcellos 22PhD, assistant professor of Accounting at W. P. Carey School of Business, Arizona State University, created a novel hypothesis based on conflicting stereotypes from the CEO position and nonnative accents. They reasoned that the stereotype-reconciliation process–the way people accommodate incompatible stereotyped perceptions to form a consistent impression of nonnative accented CEOs–might yield counterintuitive results. of all companies in the U.S. and more than 11 percent of Fortune 500 firms are run by foreign-born chief executives.

“Specifically, we hypothesized that stereotypes attached to nonnative speakers–that they’re less educated or advantaged–would in some way compete with the way we (stereotypically) see the figure of the CEO as someone powerful, successful, and of high-status,” explains Kadous.

Using recorded earnings calls performed by actors with a nonnative accent or a standard American accent, the study yielded compelling results.

“Across the board, we found that investors were more positively disposed to CEOs with foreign accents. When we asked them to describe a CEO based on hearing the individual speak, investors used 2.5 times as many positive adjectives and qualifiers to describe nonnative-accented individuals versus native speakers.”

—Leo Barcellos 22PhD

Their research revealed:

> Investors are 36 times as likely to describe the CEO as having “exceptional traits” when the CEO spoke with a nonnative versus U.S. native accent.

> Investors infer that the nonnativeaccented CEO must have exceptional characteristics thus explaining how a member of a disadvantaged group rose to a top management position. They see the nonnative group as having “worked their way up the ladder.” The qualifiers they use include “hardworking” and “integrity” and increasing the perception for workers that “they’ve been there, too.”

> Investors are a stunning 33 times more willing to invest when they are encouraged to form an impression of CEOs who speak with a nonnative accent, such as when the company reports poor performance or “bad news.”

So how can leaders use these findings?

Barcellos explains, “Our research shows that accented managers should not be reluctant to speak up or step forward in key meetings, for fear of being judged poorly on their accent.” Kadous stresses the imperative for boards and senior decision-makers to guard against discrimination in appointing and retaining top executives—especially when times are tough and performance suffers.

David Schweidel, Professor of Marketing

Morgan Ward, Assistant Professor of Marketing