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CEO Extraversion, Management Team Characteristics, and Firm Operating Performance

3. Findings

Our results indicate that CEO extraversion is positively associated with firm
performance. Furthermore, TMT homogeneity and firm equity risk weaken this positive

relationship, while TMT shared experiences and market competitiveness strengthen
it. The study further conducts three sensitivity tests. First, using CEO turnover as the
event, it employs a difference-in-differences analysis to examine whether the impact on
firm performance has changed when the CEO’s extraversion trait shifts from low to high

following the turnover. Second, TMT background homogeneity is replaced with tenure
homogeneity to investigate the latter’s moderating effect. Third, different measures of firm
performance are adopted, including earnings before interest and taxes and the ratio of firm
market value to book value. The results of these robustness tests are consistent with the

main findings.

4. Research Limitations/Implications

The results of this study highlight the significant role of CEO extraversion in
corporate strategic management and performance. Specifically, CEO extraversion
enhances interactions within the TMT, reduces communication costs, and increases work
efficiency. Such a trait also provides CEOs with greater flexibility in strategic decision-

making, aiding in their firms’ rapid adaption to competitive environments and, in turn,
boosting their performances.
Moreover, the results also show that various organizational cultural and external
environmental factors such as TMT homogeneity, shared experiences, firm equity

risk, and market competitiveness also influence the effect of CEO extraversion on firm
performance. Specifically, TMT homogeneity, or the similarity of backgrounds and
perspectives within the TMT, can diminish the positive impact of extraverted CEOs on
firm performance. When the TMT is highly homogeneous, members tend to share similar
viewpoints and preferences, leading to a more harmonious work environment and reduced

conflicts. However, this cohesion can also result in a lack of diverse opinions and critical
thinking. In such cases, extraverted CEOs may encounter less resistance to their decisions,
which could lead to complacency and a lack of constructive challenges. This absence of

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