Chen, T. K., Huang, P. C., and Tseng, Y. 2024. CEO Extraversion, Management Team Characteristics, and Firm Operating Performance. NTU Management Review, 34 (2): 1-48. https://doi.org/doi.org/10.6226/NTUMR.202408_34(2).0003
Tsung-Kang Chen, Department of Management Science, National Yang Ming Chiao Tung University / Researcher of Center for Research in Econometric Theory and Applications, National Taiwan University
Po-Chun Huang, Department of Management Science, National Yang Ming Chiao Tung University
Yijie Tseng, Department of Accounting, Fu Jen Catholic University
Abstract
The study aims to investigate the association between CEO extraversion and firm operating performance (measured by accounting- and market-based performance), employing the five-factor personality model (FFM) (Costa and McCrae, 2000) and data from the S&P 500 firms from 2007 to 2019. CEOs’ extraversion scores are estimated using the Open Language Chief Executive Personality Tool (OLCPT) (Harrison, Thurgood, Boivie, and Pfarrer, 2019). The results show a significant and positive association between CEO extraversion and firm operating performance. In addition, this study finds that homogeneity in Top Management Team (TMT) backgrounds and equity volatility significantly weaken the positive association between CEO extraversion and firm performance, while TMT shared working experience and market competitiveness significantly strengthen the positive association between CEO extraversion and firm performance. Finally, the results remain consistent even when controlling for the effects of other four personality traits (i.e. conscientiousness, neuroticism, agreeableness, and openness), employing difference-in-difference analysis, using TMT tenure homogeneity as the moderator instead, and utilizing alternative proxies of accounting- and market-based performance.
Keywords
CEO personality traitsextraversionoperating performancemanagement team homogeneityshared working experience