Previous versions of this paper were presented at the 24th SMS International Annual Conference, the British Academy of Management 2005 conference, the ACEDE 2005 conference and the AECA 2007 conference. We are grateful to the participants for their helpful comments. Special thanks to the editor-in-chief and the two anonymous reviewers. Any remaining errors are entirely our responsibility.
Too Negative to Take Risks? The Effect of the CEO's Emotional Traits on Firm Risk
Article first published online: 31 MAR 2009
© 2009 British Academy of Management
British Journal of Management
Volume 21, Issue 2, pages 313–326, June 2010
How to Cite
Delgado-García, J. B., De La Fuente-Sabaté, J. M. and De Quevedo-Puente, E. (2010), Too Negative to Take Risks? The Effect of the CEO's Emotional Traits on Firm Risk. British Journal of Management, 21: 313–326. doi: 10.1111/j.1467-8551.2008.00625.x
- Issue published online: 25 MAY 2010
- Article first published online: 31 MAR 2009
Except for some recent survey and experimental studies, strategic management research has tended to neglect the influence of emotions on managers' strategic choices. This paper analyses the influence of the stable, long-term emotional traits of CEOs on an actual business outcome: risk taking. The hypotheses are tested on a sample of 51 Spanish banks and savings banks. Our results show that CEO affective traits influence banks' risk taking. Specifically, our analyses show that managers' negative affective traits are related to lower risk taking as reflected in a lower variability in performance, a lower level of credit risk and a less risky composition of the loan portfolios of the banks they manage. Positive affective traits do not seem to influence the level of risk. These findings partially support ‘affect congruency and generalization’ arguments, and show the need to consider the role of affects when analysing CEOs' strategic choices.