There’s an old joke that asks:

     “How can you tell when a lawyer is lying?”

      Answer: His lips are moving.

Well, apparently the same can be said for detecting the lies of CEOs…and job candidates.

Two professors David Larcker and Anastasia Zakolyukina at Stanford Graduate School of Business studied the transcripts of nearly 30,000 conference calls by American chief executives and chief financial officers between 2003 and 2007. They apparently have figured out how to tell when executives are lying. They noted each boss’s choice of words, and how he delivered them. They drew on psychological studies that show how people speak differently when they are fibbing, testing whether these lies were more common during calls whose contents were later “materially restated.”  They published their findings in a paper called “Detecting Deceptive Discussions in Conference Calls”.

Deceptive bosses tend to make more references to general knowledge (“as you know…”), and refer less to shareholder value (perhaps to minimize the risk of a lawsuit,. They also use fewer “non-extreme positive emotion words”. That is, instead of describing something as “good”, they call it “fantastic”. The aim is to “sound more persuasive” while talking pure b.s.

When they are lying, bosses avoid the word “I”, opting instead for the third person. They also didn’t stumble over their words as often. They use fewer “hesitation words” like “um,” “suggesting that they may have been coached in their deception.” Liars were also more likely to act like everyone already knew what they were saying was true (“as you know”).  And when provoked, they swear (“you a$$hole!”) as former Enron CEO Jeff Skilling did when investor challenged his rosy account of his firm’s financial health.  For a while, this information should be of some use to investors who suspect that they’re being taken for a ride. But the Economist predicts that ultimately, the study will be most helpful to PR firms, “which now know to coach the boss to hesitate more, swear less and avoid excessive expressions of positive emotion.”

This study should help investors question the rhetoric coming the moving lips of CEOs.  But could it also give astute managers the edge they need to uncover the lies of job candidates?