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Navigate the turbulence: CEO extraversion and the cost of debt

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Listed:
  • Li, Yifei
  • Wang, Anni
  • Wu, Qun

Abstract

This paper examines the impact of chief executive officer (CEO) extraversion on firms’ cost of debt. We find that extraverted CEOs excel in navigating challenging or uncertain situations, leading to lower offering yield spreads and longer maturity terms on newly issued corporate debt in tight credit market conditions. Furthermore, our study identifies the information channel underlying the CEO extraversion effect. By improving the firm’s information environment, extraverted CEOs exert a more significant impact on bond issuances from opaque firms. Our research provides new evidence on how CEO personality traits can influence corporate financial decisions.

Suggested Citation

  • Li, Yifei & Wang, Anni & Wu, Qun, 2024. "Navigate the turbulence: CEO extraversion and the cost of debt," Finance Research Letters, Elsevier, vol. 67(PB).
    • Handle: RePEc:eee:finlet:v:67:y:2024:i:pb:s1544612324009516
    DOI: 10.1016/j.frl.2024.105921
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    References listed on IDEAS

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    More about this item

    Keywords

    CEO extraversion; Cost of debt; Information asymmetry; Offering yield spreads;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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