Abstract
The personality of CEOs is increasingly garnering attention as it relates to the accounting discipline due to the documented impact on important firm level outcomes. In this work, we examine the role of CEOs' Big Five personality traits on the occurrence and severity of adverse financial restatements. Leveraging machine and deep learning techniques, we first extract CEO personality scores from the audio, visual, and text features of videos. These scores are then used to advance understanding surrounding the relationship between CEO personality and adverse financial restatements of firms, controlling for firm and CEO characteristics. Results reveal that CEO extraversion is the most robust indicator of adverse financial restatements, increasing the likelihood of their occurrence. When adverse financial restatements occur, CEO neuroticism and conscientiousness reduce their severity as proxied by negative market reactions. These results underscore how CEO personality may shape the financial reporting of firms.
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Yiyang Zhang
Ph.D. Candidate in Finance
My research interests include Option Market, Asset Pricing, Institutional Investors, Behavioral Finance, and Artificial Intelligence.