CLEMSON — Modesty may be the best policy — and pay dividends — for captains of industry, especially when they’re delivering quarterly earnings reports, according to Clemson University business school research.

Though some identify the C-Suite personality as self-aggrandizing or narcissistic, Clemson’s research shows that many executives who exhibit modest behavior on earnings calls with analysts bolster their companies’ bottom lines.

Amy Ingram

Amy Ingram

The research, conducted by Amy Ingram, assistant professor of management at Clemson, and Jason Ridge, assistant business professor at the University of Arkansas, reviewed transcripts of 450 publicly traded companies’ earnings calls with financial analysts from 2007 to 2011.

More than 5,800 earnings calls, all S&P 500 companies, were analyzed. In addition to the financial analysts, the calls generally included chief executive officers, chief financial officers, chief investment officers and vice presidents of investor relations.

“Very little research has been done to determine how modest behavior during earnings calls affects financial performance,” Ingram said. “But our study shows evidence that many companies whose executives came across as modest on calls with analysts saw abnormally improved financial results following those calls.”

Researchers identified abnormal returns as being the difference between the predicted or normal stock returns and the actual return after the earnings call.

Though modesty’s effect on financial performance is difficult to measure, Ingram and Ridge employed a number of controls to determine factors other than modesty that could have affected a company’s subsequent financial performance.

In analyzing the transcripts of nearly 6,000 earnings calls, the researchers used software to code for key words and phrases that would identify instances of modesty in an executive’s presentation.

The earnings calls are key influencers of a company’s financial performance. Company executives attempt to elicit positive expectations of their firms’ future opportunities, successes and overall performance in quarterly calls with financial analysts.

“Our study showed 50 percent of the companies whose executives exhibited modesty in these calls experienced improved financial performance,” Ingram said. “The modest behavior seems to communicate a more credible, trustworthy person. So it would behoove those on these calls to maintain a congenial demeanor in their attempt to ascertain favorable results for their firms.”

Ingram said the study results, and others conducted recently, may suggest that a shift in attitudes of top executives might be in the offing.

“For many years, top management team leaders’ sometimes arrogant behavior has been tolerated. As our world becomes much more socially responsible, it wouldn’t be surprising if expectations of attitude changes worked their way to the C-Suite, especially if it can have an impact on the bottom line.”