Economic situation, the key to understanding the links between CEOs' personal traits and the financial structure of large private companies.
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...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
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Public Library of Science (PLoS)
2019-01-01
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| Series: | PLoS ONE |
| Online Access: | https://doi.org/10.1371/journal.pone.0218853 |
| _version_ | 1818825568094781440 |
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| author | Jorge Hernández-Pérez Salvador Cruz Rambaud Tomás Lorenzana de la Varga |
| author_facet | Jorge Hernández-Pérez Salvador Cruz Rambaud Tomás Lorenzana de la Varga |
| author_sort | Jorge Hernández-Pérez |
| collection | DOAJ |
| description | 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. |
| first_indexed | 2024-12-19T00:13:50Z |
| format | Article |
| id | doaj.art-2784b6254f154f06be46978ca9bab0ce |
| institution | Directory Open Access Journal |
| issn | 1932-6203 |
| language | English |
| last_indexed | 2024-12-19T00:13:50Z |
| publishDate | 2019-01-01 |
| publisher | Public Library of Science (PLoS) |
| record_format | Article |
| series | PLoS ONE |
| spelling | doaj.art-2784b6254f154f06be46978ca9bab0ce2022-12-21T20:45:54ZengPublic Library of Science (PLoS)PLoS ONE1932-62032019-01-01147e021885310.1371/journal.pone.0218853Economic situation, the key to understanding the links between CEOs' personal traits and the financial structure of large private companies.Jorge Hernández-PérezSalvador Cruz RambaudTomás Lorenzana de la VargaExecutives 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.https://doi.org/10.1371/journal.pone.0218853 |
| spellingShingle | Jorge Hernández-Pérez Salvador Cruz Rambaud Tomás Lorenzana de la Varga Economic situation, the key to understanding the links between CEOs' personal traits and the financial structure of large private companies. PLoS ONE |
| title | Economic situation, the key to understanding the links between CEOs' personal traits and the financial structure of large private companies. |
| title_full | Economic situation, the key to understanding the links between CEOs' personal traits and the financial structure of large private companies. |
| title_fullStr | Economic situation, the key to understanding the links between CEOs' personal traits and the financial structure of large private companies. |
| title_full_unstemmed | Economic situation, the key to understanding the links between CEOs' personal traits and the financial structure of large private companies. |
| title_short | Economic situation, the key to understanding the links between CEOs' personal traits and the financial structure of large private companies. |
| title_sort | economic situation the key to understanding the links between ceos personal traits and the financial structure of large private companies |
| url | https://doi.org/10.1371/journal.pone.0218853 |
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