CEO personality traits and compensation: evidence from investment efficiency
Abstract We examine the effects of the big five personalities of CEOs (openness, conscientiousness, extroversion, agreeableness, and neuroticism) on their annual compensation. We hand-collect the tweets of S&P 1500 CEOs and use IBM’s Watson Personality Insights to measure their personalities. CEOs with high ratings of agreeableness and conscientiousness get more compensation. We further find that the firms with these CEOs outperform their peers due to better investment efficiency. Firms are willing to pay higher compensation for talent, especially for firms with better operations, located in states with higher labor unionization, or facing higher competition in the product market. Overall, CEO personality is a valid predictor of CEOs’ compensation.
Authors
- Chien‐Lin Lu (ORCID: https://orcid.org/0000-0003-1435-6123)
- Iftekhar Hasan (ORCID: https://orcid.org/0000-0003-2469-0539)
- Chih‐Yung Lin (ORCID: https://orcid.org/0000-0002-7407-7794)
- Yao Du
Institutions
- National Yang Ming Chiao Tung University (TW)
- Bank of Finland (FI)
- Hangzhou Dianzi University (CN)
- National Taipei University (TW)
Publication Details
- Journal
- Review of Quantitative Finance and Accounting
- Published
- 2025-02-24
- DOI
- https://doi.org/10.1007/s11156-025-01391-8
- Citations
- 2
- Primary Topic
- Corporate Finance and Governance
- Type
- article
- Field-Weighted Citation Impact
- 7.82