Top executives' emotional stability and firm risk-taking: A machine learning-based study

IF 4.8 2区经济学 Q1 BUSINESS, FINANCE

Pacific-Basin Finance Journal Pub Date : 2025-01-16 DOI:10.1016/j.pacfin.2025.102679

Jintong Guo, Rui Ding, Ziyi Zhang, Min Zhang

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引用次数: 0

Abstract

This study shows that executive personality traits play an important role in firm risk-taking. We introduce a novel videometric measure of executives' emotional stability using a video-based machine learning method. We validate this by providing evidence consistent with the neuroscience literature that older and male executives are more emotionally stable. We find that emotionally stable executives are more receptive to risk-taking. This effect is primarily driven by the emotional regulation towards negative moods. The positive relation between emotional stability and corporate risk-taking is prominent when executives face greater capital market pressure. Firms led by emotionally stable executives have fewer cash holdings, greater leverage, and higher investment expenditure. In addition, we find that executives' emotional stability increases firm financial performance. Overall, this study sheds light on executive personality antecedents of firm-level outcomes, and provides insights into measuring emotional stability in large-scale studies.

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来源期刊

Pacific-Basin Finance Journal BUSINESS, FINANCE-

CiteScore

6.80

自引率

6.50%

发文量

157

期刊介绍： The Pacific-Basin Finance Journal is aimed at providing a specialized forum for the publication of academic research on capital markets of the Asia-Pacific countries. Primary emphasis will be placed on the highest quality empirical and theoretical research in the following areas: • Market Micro-structure; • Investment and Portfolio Management; • Theories of Market Equilibrium; • Valuation of Financial and Real Assets; • Behavior of Asset Prices in Financial Sectors; • Normative Theory of Financial Management; • Capital Markets of Development; • Market Mechanisms.