Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/258479 
Year of Publication: 
2021
Citation: 
[Journal:] Journal of Risk and Financial Management [ISSN:] 1911-8074 [Volume:] 14 [Issue:] 8 [Article No.:] 375 [Publisher:] MDPI [Place:] Basel [Year:] 2021 [Pages:] 1-19
Publisher: 
MDPI, Basel
Abstract: 
We utilize the IBM Watson Personality Insights service to analyze CEOs' verbal communication during conference calls to infer CEOs' Big Five personality traits, which we employ to estimate their risk tolerance levels. We then explore whether the misalignment of CEO risk tolerance and governance structures is associated with company performance. Using a two-stage contingency approach, we test two hypotheses: (1) CEO risk tolerance and corporate governance structures are associated; and (2) misalignment of these structures with risk tolerance is negatively associated with financial performance. Based on a sample of 8208 firm-year observations during 2002-2013, we find support for both predictions. Our results support upper echelons theory and suggest that knowledge about CEOs' inherent personality traits is important and relevant for governance mechanisms to work effectively.
Subjects: 
corporate governance
Big Five
CEO personality
performance
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article

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