The Value of CEO Extraversion – Implications for CEO Pay and Firm Performance
We study the effect of chief executive officer (CEO) extraversion on CEO pay. Integrating research on personality and career outcomes, we theorize that CEO’s pay and other career related outcomes will differ across more and less extraverted CEOs. We collected longitudinal data on a sample of 3,149 unique CEOs from 1,703 S&P 1500 firms from 2003 to 2013. To measure personality traits of CEOs, we used computerized text analysis on the language spoken by CEOs in the discussion portion of the quarterly earnings conference calls over a multi-year period (2003 to 2013). We find that, in comparison to less extraverted CEOs, more extraverted CEOs earn a significantly higher pay, they also earn higher relative pay vis-a-vis other top managers in the firm, and are also more likely to become first-time CEOs at a younger age. A one-unit increase in CEO extraversion is associated with a $233,260 increase in CEO’s total pay. Moreover, the effect of CEO extraversion on CEO pay is partially mediated by the size of CEO’s board network. Finally, consistent with the better fit explanation of the effect of CEO extraversion on CEO pay, we find that CEO extraversion has a positive impact on firm performance.
Speaker: Shavin Malhotra, Associate Professor, University of Waterloo
Dr. Shavin Malhotra is an Associate Professor of Strategy at the Conrad Business, Entrepreneurship and Technology Centre, Faculty of Engineering, University of Waterloo. He previously worked as an Associate Professor at the Ted Rogers School of Management, and as the Co-director of the International Research Institute for Ryerson University. His research seeks to understand the dynamics behind firms’ domestic and global business strategies by untangling the influence of country of origin and industry as well as firm- and individual-level characteristics. To date, he has published 23 refereed journal articles, including publications in the top management journals Administrative Science Quarterly, Strategic Management Journal, Journal of International Business Studies, Entrepreneurship Theory and Practice, Journal of Management, and Journal of World Business. His research has also featured in the Harvard Business Review. His presentations have garnered four best paper awards and one distinguished paper award, and he is also the recipient of several external and internal grants, including the Social Sciences and Humanities Research Council of Canada Insight Grants in 2016 and 2013. He was recognized by University of Waterloo for teaching excellence in 2017 and 2018, and in 2013, he was selected by undergraduate students at Ryerson University as “A Prof Who Makes a Mark”.