Ceo Extraversion and Capital Structure Decisions: the Role of Firm Dynamics, Product Market Competition, and Financial Crisis
Year: 2020
Type: article
Abstract: Using panel data of U.S. firms, we focus on an important yet understudied facet of the chief executive officer's (CEO) personality—extraversion—and how it affects corporate capital structure decisions. We examine how this relation is moderated by financing (tax) benefits, financial crisis, firm size, growth opportunities, and collateralization. The results show that firms managed by extraverted CEOs use greater financial leverage, adjusting toward target leverage levels at a faster speed, with about half‐life within a year for book and market leverage. In addition, the positive extraversion–leverage relation is enhanced for firms that are large, have greater collateralizable assets, and are more vulnerable to external shocks (financial crisis). Last, although the positive extraversion–leverage relation holds particularly when product market competition is high, the effect is attenuated for high‐growth opportunity firms.
DOI: 10.1111/jfir.12227
Authors: Theophilus Lartey, Kwabena Kesse, Albert Danso
Institutions: De Montfort University, University of South Dakota
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
Estimated APC paid: $3,000
OpenAlex ID: W3081530877