Measuring CEO personality: Developing, validating, and testing a linguistic tool

Research Summary: We introduce to the upper echelons literature a novel, linguistic measure of CEOs' Big Five personality traits that we specifically developed and validated using a sample of CEOs. We then provide a predictive test of the measure by applying it to a sample of more than 3,000 CEOs of S&P 1500 firms to explore the direct and interactive effects of CEOs' Big Five personality traits and firm performance on strategic change. Our validated, unobtrusive measure of CEOs' Big Five traits provides a strong foundation for future theory development on the firm-level effects of CEOs' personality traits. Our specific findings also extend our understanding of how CEO personality influences firm-level change and how both person and situation-based factors interact to jointly influence firm strategy. Managerial Summary: This paper introduces a language-based tool we developed to measure the Big Five personality traits (i.e., openness, conscientiousness, extraversion, agreeableness, and neuroticism) of more than 3,000 CEOs of S&P 1500 firms. After describing our process to develop and validate the tool, we test it by examining how CEOs' Big Five traits influence strategic change, both in isolation and in combination with recent firm performance. Our results suggest that CEOs' personality traits have a meaningful impact on strategic change, but that the nature of these effects differs based on their firms' recent performance. Our tool also provides a strong basis for scholars seeking to measure the personality traits of large samples of publiccompany executives.