CEO EXTRAVERSION AND CAPITAL STRUCTURE DECISIONS: THE ROLE OF FIRM DYNAMICS,PRODUCT MARKET COMPETITION,AND FINANCIAL CRISIS

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.     

THE STRUCTURE AND CONTENT OF EXECUTIVE AGENCY FINANCIAL STATEMENTS

This paper reports the results of a survey of the published financial statements of executive agencies entering the Price Waterhouse Best Agency Report and Accounts Competition. The survey illustrates the application of GAAP designed for one environment in a different context and the difficulties that result under these circumstances from the absence of direct analogies for some classes of event. Some suggestions for improvements in reporting are made, includ- ing: the publication of standardised, sector-wide, guidance; standardisation of formats and terminology; the use of the 'expenditure less income' format for the operating statement in appropriate cases; and the clarification of insur- ance arrangements.