The acquisitive nature of extraverted CEOs

This study examines how extraversion, a personality trait that signifies more or less positive affect, assertive behavior, decisive thinking, and desires for social engagement, influences Chief Executive Officer (CEO) decisions, and ensuing strategic behavior of firms. Using a nov-el linguistic technique to assess personality from unscripted text spoken by 2,381 CEOs of S&P 1500-listed firms during quarterly earnings conference calls over a ten-year timespan, we show that CEO extraversion has an important bearing on the M&A behavior of firms above and be-yond other well-established personality traits. Specifically, we find that extraverted CEOs are more likely to engage in acquisitions, and conduct larger ones, and that these effects are par-tially explained by their higher representation on boards of other firms. Moreover, we find that the acquisitive nature of extraverted CEOs reveals itself particularly under so-called “weaker” situations, when CEOs enjoy considerable discretion to behave in manners that are akin to their personality traits. Subsequent analyses also show that extraverted CEOs are more likely to suc-ceed in M&As, as reflected in stronger abnormal returns following acquisition announcements.