A Linguistic-Based Approach to Measuring Innate Executive Traits: The Case of CEO Integrity

We forward and validate a linguistically-derived measure of CEO integrity. We contend low-integrity CEOs lack credibility when communicating, which creates a demand for explanations beyond that created by firm-specific or other CEO characteristics. We capture the supply of such explanations by low-integrity CEOs via relatively excessive explanations in the annual shareholder letter. Using shareholder letter causation words to measure variation...