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Economic situation, the key to understanding the links between CEOs' personal traits and the financial structure of large private companies
- Source :
- PLoS ONE, Vol 14, Iss 7, p e0218853 (2019), PLoS ONE
- Publication Year :
- 2019
- Publisher :
- Public Library of Science (PLoS), 2019.
-
Abstract
- Executives act based on their experiences, values, personality and personal interpretation of the situations which they face in their companies. Investigations in the field of Behavioral Corporate Finance have determined that there are some relations between CEOs' personal traits and financial decisions of large companies, but these results are based on indirect personal trait measurements and on public companies. To see whether such relations also exist between CEOs' personal traits and the financial structure of large private companies, we used psychometric tests to measure their level of optimism, risk attitude and affect heuristic, collected financial data for a period of fourteen years, and considered the economic situation of the country as a key factor in these relations. This paper reports the relationship of executives' personal traits with the financial structure of large Spanish companies for the period 2001-2014. We observed that executives' high optimism (and risk aversion attitude) is positively (negatively) related to long-term debt, whilst positive affect is directly associated to the financial leverage and short-term debt. This paper also reports a change of relations when taking into account the country's economic situation. In effect, by considering this new variable, executives' risk aversion is seen to be associated to financial leverage and short-term debt, whilst CEOs' positive affect is linked to long-term debt. These relations are strongly moderated and they become statistically significant in a contracting economic period. In conclusion, the links between CEOs' personal traits and financial structure of large private Spanish companies make sense when the effect of the economic situation is taken into account. Furthermore, the awareness of these links helps to understand the financial decisions taken within large Spanish companies.
- Subjects :
- Questionnaires
European People
Spanish People
Psychometrics
Economics
Social Sciences
Face (sociological concept)
Infographics
Cognition
Mathematical and Statistical Techniques
Ethnicities
Psychology
050207 economics
Hispanic People
media_common
050208 finance
Multidisciplinary
Risk aversion
Statistics
05 social sciences
Commerce
Research Design
Physical Sciences
Regression Analysis
Medicine
Graphs
Research Article
Personality
Computer and Information Sciences
Affect heuristic
media_common.quotation_subject
Science
Decision Making
Accounting
Research and Analysis Methods
Corporate finance
Optimism
Debt
0502 economics and business
Humans
Statistical Methods
Organizations
Survey Research
business.industry
Data Visualization
Cognitive Psychology
Biology and Life Sciences
Attitude
Spain
Face
People and Places
Cognitive Science
Population Groupings
business
Finance
Mathematics
Neuroscience
Subjects
Details
- Language :
- English
- ISSN :
- 19326203
- Volume :
- 14
- Issue :
- 7
- Database :
- OpenAIRE
- Journal :
- PLoS ONE
- Accession number :
- edsair.doi.dedup.....85f4f80f2b96867a9db50964ca2bec8c