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      CEO Personality and Firm Policies
      23 Aug 2016Working Paper Summaries

      CEO Personality and Firm Policies

      by Ian D. Gow, Steven N. Kaplan, David F. Larcker, and Anastasia A. Zakolyukina
      This study analyzes the linguistic content of the Q&A portion of more than 70,000 conference calls in order to explore the relationship between individual traits of senior executives, the investment and financing choices made by these executives, and firm performance. Among the findings, openness is positively associated with R&D intensity and negatively associated with net leverage. Conscientiousness is negatively associated with growth. In performance tests, extraversion is negatively associated with both contemporaneous and future return on assets and cash flow.
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      Author Abstract

      Based on two samples of high quality personality data for chief executive officers (CEOs), we use linguistic features extracted from conference calls and statistical learning techniques to develop a measure of CEO personality in terms of the Big Five traits: agreeableness, conscientiousness, extraversion, neuroticism, and openness to experience. These personality measures have strong out-of-sample predictive performance and are stable over time. Our measures of the Big Five personality traits are associated with financing choices, investment choices, and firm operating performance.

      Paper Information

      • Full Working Paper Text
      • Working Paper Publication Date: July 2016
      • HBS Working Paper Number: NBER Working Paper Series, No. 22435
      • Faculty Unit(s): Accounting and Management
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