Abstract
This paper examines three research problems. First, what collective personality traits are reflected in CEOs’ statements in firms’ annual reports? Second, is there any impact of collective personality on financial (ROE – return on equity) and market (TQ – Tobin’s Q) performance? Third, whether attributes of CEOs or collective personality makes a greater impact on firm performance? Using the machine learning approach employed by IBM’s Personality Insights service, we performed a content analysis of 804 CEO’s annual report statements in 402 firms to estimate collective personality scores and adopted hierarchical multiple regression analysis to examine the intended relationships. The study found that collective conscientiousness and agreeableness impact positively on ROE and TQ and collective openness and neuroticism impact negatively on either or both ROE and TQ. Further, the collective personality tends to show a greater impact on ROE and firm size by assets than the impact of CEOs attributes. Besides exploring a relatively less-researched concept, the study highlights the practical value of developing intellectual and human capital through governance practices and leadership towards enhancing firm performance.
Highlights
The twenty-first-century knowledge economy is based on digital transformation and intellectual and human capital
As financial (ROE) and market (TQ) performance of firms might be influenced by a number of factors, we used six control variables associated with industry level, firm level, and CEO level in the examination of the impact of collective personality on firm performance
There is a paucity of empirical research attempting to investigate collective personality traits in organizations
Summary
The twenty-first-century knowledge economy is based on digital transformation and intellectual and human capital. Human and organizational capital act as determinants of recurring patterns of behaviour of multiple organizational members involved in performing organizational tasks (Hofmann & Jones, 2005; Feldman & Rafaeli, 2002) and their outcomes In line with these evolving trends and developments in knowledge and digital economy, there has been a shift in how intellectual assets are defined and conceptualized (e.g., Cortinovis, Xiao, Boschma, & van Oort, 2017) and managing the intellectual and human capital of the firm has become one of the main tasks in the executive agenda (Bodolica, 2019; Elbahar, 2019; Kell et al, 2018; McCracken et al, 2017; Mahoney & Kor, 2015; Martín-de-Castro et al, 2006). What collective personality traits are reflected in CEOs’ statements published in firms’ annual reports? Second, is there any impact of collective personality on financial (ROE – return on equity) and market (TQ – Tobin’s Q) performance? Third, whether attributes of CEOs or collective personality makes a greater impact on firm performance?
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