Corporate debt ratios and managerial personality traits: A content analysis of chief executive officers’ speeches at annual general meetings

This study contributes to the literature by analysing the joint association of managerial overconfidence, certainty, narcissism, and the Big Five personality traits with debt ratios in the institutional setting of the German two-tier system. Moreover, it provides insights into how corporate governance quality moderates the effects of personality. The analysis relied on the chief executive officers’ (CEOs’) speeches at annual general meetings (AGMs) that were voluntarily disseminated, a novel data source. Managers’ personality traits were measured using software-aided content analysis, and their impact on the debt ratio was analysed using panel regressions. Consistent with previous studies, the debt ratios of German issuers are significantly and positively related to the proxies of managerial certainty and narcissism. However, their model inclusion contributes only marginally to explanatory power. Conversely, the coefficients of the proxies for the Big Five personality traits remained statistically non-significant. Moreover, a significantly negative relationship between debt ratios and the interaction term between a proxy for corporate governance quality and managerial certainty is observed that corresponds to the risk-mitigating impact of corporate governance.