Investors evaluate companies by gauging management effectiveness, quality, character, and values. Surprisingly, executives, who have an inordinate influence on their stock price, often transmit the wrong signals and act improperly with their investors, the media, customers, and employees. They fall prey to cheerleading and puffery. They over-promote their stock, managing the stock instead of the company. I was a securities analyst on Wall Street for 32 years, and this subject is so important to investors that in my book, Full of Bull, I devote an entire chapter entitled, "Executive Traits are a Revealing Investment Gauge."

Candor, Access Executives gain credibility by being forthright, freely discussing negative cross currents and challenges. Access is critical, management must be open, available, and responsive to Wall Street and investors as opposed to being evasive or secretive.

Humble, Genuine Company leaders should not be arrogant—no attitude or egos, hype, or PR baloney. Firms in the Midwest, for example, seem to be more genuine. Warren Buffet comes to mind, schmoozes with the little guy, eats hamburgers with Bill Gates in the local diner, and speaks with brutal frankness. Executives should willingly admit mistakes and alter course. No one’s perfect or invincible.

Trust, Quality, Class Management must be honorable, their comments reliable, their actions straightforward. They should act with class, not be litigious, display no vindictiveness, do nothing shady or sleazy. Investors need to be able to trust executives to the core.

Hands on, in Touch Executives should be aware of what’s occurring within the company at several levels and be in contact with the little people, not buffered by multiple management levels. Ross Perot was a master at this, chatting with his lowest-level associates in the elevator and in the cafeteria. John Chambers at Cisco engages all strata of employees.

Outgoing, Aggressive, Confident I like to see these elements, and yes, they can co-exist with humility. Executives should not be shy, inward, or parochial. There needs to be a certain toughness, assertiveness, and conviction as long as there is the realization of vulnerability.

Old-Fashioned Business Values Management should be long-term oriented, use no stopgap acts to boost immediate earnings, have a certain discipline, and avoid overpaying for acquisitions. They shouldn’t have sumptuous headquarters or ostentatious perks. They should care about low-level employees and small clients.

Conservative, Understated Executives shouldn’t mix business with social styling and other over the top dress practice. Investors are bothered by flashy manners, extravagant events or meetings, and anything that substitutes superficial showmanship for substance. Gold chain jewelry, monogrammed cuffs, overly chic designer shoes, or tony fashions are off-putting.

DON’Ts are Extensive and Subtle

There’s probably little dispute on the "DOs," they’re fairly straightforward. The list of "DON’Ts" is more extensive and subtle: arrogance, flamboyance, trash-talking, stock price fixation, overindulging, to name a few. Many times executives are not lying; they are just uninformed, naive, overly optimistic, or eternal low-ballers, taciturn, or shrewd storytellers. When investors and the media notice undesirable traits they are immediately defensive and skeptical.

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