IDEAS home Printed from https://ideas.repec.org/a/wly/buseth/v30y2021i3p338-359.html

CEO personality and language use in CSR reporting

Author

Listed:
  • Fereshteh Mahmoudian
  • Jamal A. Nazari
  • Irene M. Gordon
  • Karel Hrazdil

Abstract

We explore the relationship between chief executive officer (CEO) personality traits and corporate social responsibility (CSR) reporting. Upper echelons theory indicates that the values, experiences, and personalities of top organizational managers influence their organization's strategic decisions and effectiveness. We utilize IBM Watson Personality Insights software to infer CEOs’ personality traits based on their responses to questions raised by analysts during year‐end conference calls; we obtain CEOs’ Big Five personality traits—openness, conscientiousness, extraversion, agreeableness, and neuroticism—from which we compute a measure of their risk tolerance. Using a longitudinal dataset of Standard and Poor's 500 firms for 2008–2015, we document that high CEO risk tolerance is related to lower CSR report readability and smaller CSR disclosure volume. This finding indicates that executives who are comfortable with greater risk are more willing to supply stakeholders with reports that are shorter and require greater effort to understand. Exploration of the association between CEO Big Five personality traits and CSR report readability and disclosure volume allows key stakeholders to better comprehend CSR disclosures and connotations thereof. Overall, our results contribute to the debate on how CEO personality traits affect organizations’ CSR disclosure reporting strategies, and support upper echelons theory in the CSR setting.

Suggested Citation

  • Fereshteh Mahmoudian & Jamal A. Nazari & Irene M. Gordon & Karel Hrazdil, 2021. "CEO personality and language use in CSR reporting," Business Ethics, the Environment & Responsibility, John Wiley & Sons, Ltd., vol. 30(3), pages 338-359, July.
    • Handle: RePEc:wly:buseth:v:30:y:2021:i:3:p:338-359
    DOI: 10.1111/beer.12347
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/beer.12347
    Download Restriction: no
    File URL: https://libkey.io/10.1111/beer.12347?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Aishah Sheikh Abu Bakar & Rashid Ameer, 2011. "Readability of Corporate Social Responsibility communication in Malaysia," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 18(1), pages 50-60, January.
    2. Page, T. Beau, 2018. "CEO attributes, compensation, and firm value: Evidence from a structural estimation," Journal of Financial Economics, Elsevier, vol. 128(2), pages 378-401.
    3. Tim Loughran & Bill Mcdonald, 2014. "Measuring Readability in Financial Disclosures," Journal of Finance, American Finance Association, vol. 69(4), pages 1643-1671, August.
    4. Malcolm Smith & Richard Taffler, 1992. "Readability and Understandability: Different Measures of the Textual Complexity of Accounting Narrative," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 5(4), pages 1-1, December.
    5. Gus De Franco & Ole†Kristian Hope & Dushyantkumar Vyas & Yibin Zhou, 2015. "Analyst Report Readability," Contemporary Accounting Research, John Wiley & Sons, vol. 32(1), pages 76-104, March.
    6. Busic-Sontic, Ante & Czap, Natalia V. & Fuerst, Franz, 2017. "The role of personality traits in green decision-making," Journal of Economic Psychology, Elsevier, vol. 62(C), pages 313-328.
    7. repec:eme:aaaj00:09513579810231457 is not listed on IDEAS
    8. Carey, Peter & Liu, Li & Qu, Wen, 2017. "Voluntary corporate social responsibility reporting and financial statement auditing in China," Journal of Contemporary Accounting and Economics, Elsevier, vol. 13(3), pages 244-262.
    9. Neu, D. & Warsame, H. & Pedwell, K., 1998. "Managing public impressions: environmental disclosures in annual reports," Accounting, Organizations and Society, Elsevier, vol. 23(3), pages 265-282, April.
    10. Martin Plöckinger & Ewald Aschauer & Martin R.W. Hiebl & Roman Rohatschek, 2016. "The influence of individual executives on corporate financial reporting: A review and outlook from the perspective of upper echelons theory," Journal of Accounting Literature, Emerald Group Publishing Limited, vol. 37(1), pages 55-75, October.
    11. Camelia M Kuhnen & Joan Y Chiao, 2009. "Genetic Determinants of Financial Risk Taking," PLOS ONE, Public Library of Science, vol. 4(2), pages 1-4, February.
    12. Price, S. McKay & Doran, James S. & Peterson, David R. & Bliss, Barbara A., 2012. "Earnings conference calls and stock returns: The incremental informativeness of textual tone," Journal of Banking & Finance, Elsevier, vol. 36(4), pages 992-1011.
    13. Li, Feng, 2008. "Annual report readability, current earnings, and earnings persistence," Journal of Accounting and Economics, Elsevier, vol. 45(2-3), pages 221-247, August.
    14. Juita-Elena (Wie) Yusuf & Meagan M. Jordan, 2017. "Accessibility of the Management's Discussion and Analysis to Citizen Users of Government Financial Reports," Public Budgeting & Finance, Wiley Blackwell, vol. 37(4), pages 74-91, December.
    15. Kevin C. H. Chiang & Gregory J. Wachtel & Xiyu Zhou, 2019. "Corporate Social Responsibility and Growth Opportunity: The Case of Real Estate Investment Trusts," Journal of Business Ethics, Springer, vol. 155(2), pages 463-478, March.
    16. Isabel‐María García‐Sánchez & Beatriz Aibar‐Guzmán & Cristina Aibar‐Guzmán & Tânia‐Cristina Azevedo, 2020. "CEO ability and sustainability disclosures: The mediating effect of corporate social responsibility performance," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(4), pages 1565-1577, July.
    17. Yasir Shahab & Collins G. Ntim & Yugang Chen & Farid Ullah & Hai‐Xia Li & Zhiwei Ye, 2020. "Chief executive officer attributes, sustainable performance, environmental performance, and environmental reporting: New insights from upper echelons perspective," Business Strategy and the Environment, Wiley Blackwell, vol. 29(1), pages 1-16, January.
    18. Chakraborty, Atreya & Gao, Lucia Silva & Sheikh, Shahbaz, 2019. "Managerial risk taking incentives, corporate social responsibility and firm risk," Journal of Economics and Business, Elsevier, vol. 101(C), pages 58-72.
    19. Volkan Muslu & Sunay Mutlu & Suresh Radhakrishnan & Albert Tsang, 2019. "Corporate Social Responsibility Report Narratives and Analyst Forecast Accuracy," Journal of Business Ethics, Springer, vol. 154(4), pages 1119-1142, February.
    20. repec:eme:jal000:j.acclit.2016.09.002 is not listed on IDEAS
    21. Tim Loughran & Bill Mcdonald, 2016. "Textual Analysis in Accounting and Finance: A Survey," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 54(4), pages 1187-1230, September.
    22. John K. Courtis, 1998. "Annual report readability variability: tests of the obfuscation hypothesis," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 11(4), pages 459-472, October.
    23. Nigel Nicholson & Emma Soane & Mark Fenton-O'Creevy & Paul Willman, 2005. "Personality and domain-specific risk taking," Journal of Risk Research, Taylor & Francis Journals, vol. 8(2), pages 157-176, March.
    24. Yen†Jung Lee, 2012. "The Effect of Quarterly Report Readability on Information Efficiency of Stock Prices," Contemporary Accounting Research, John Wiley & Sons, vol. 29(4), pages 1137-1170, December.
    25. Bidisha Chakrabarty & Ananth Seetharaman & Zane Swanson & Xu (Frank) Wang, 2018. "Management Risk Incentives and the Readability of Corporate Disclosures," Financial Management, Financial Management Association International, vol. 47(3), pages 583-616, September.
    26. Wiseman, Joanne, 1982. "An evaluation of environmental disclosures made in corporate annual reports," Accounting, Organizations and Society, Elsevier, vol. 7(1), pages 53-63, January.
    27. Karel Hrazdil & Jiri Novak & Rafael Rogo & Christine Wiedman & Ray Zhang, 2020. "Measuring executive personality using machine‐learning algorithms: A new approach and audit fee‐based validation tests," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 47(3-4), pages 519-544, March.
    28. Zhihong Wang & Tien‐Shih Hsieh & Joseph Sarkis, 2018. "CSR Performance and the Readability of CSR Reports: Too Good to be True?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 25(1), pages 66-79, January.
    29. Can Chen & Jeong‐Bon Kim & Minghai Wei & Hao Zhang, 2019. "Linguistic Information Quality in Customers' Forward‐Looking Disclosures and Suppliers' Investment Decisions," Contemporary Accounting Research, John Wiley & Sons, vol. 36(3), pages 1751-1783, September.
    30. James Heckman, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    31. Angela K. Davis & Weili Ge & Dawn Matsumoto & Jenny Li Zhang, 2015. "The effect of manager-specific optimism on the tone of earnings conference calls," Review of Accounting Studies, Springer, vol. 20(2), pages 639-673, June.
    32. Peter M. Clarkson & Jordan Ponn & Gordon D. Richardson & Frank Rudzicz & Albert Tsang & Jingjing Wang, 2020. "A Textual Analysis of US Corporate Social Responsibility Reports," Abacus, Accounting Foundation, University of Sydney, vol. 56(1), pages 3-34, March.
    33. Graham, John R. & Harvey, Campbell R. & Puri, Manju, 2013. "Managerial attitudes and corporate actions," Journal of Financial Economics, Elsevier, vol. 109(1), pages 103-121.
    34. Denis Cormier & Irene M. Gordon, 2001. "An examination of social and environmental reporting strategies," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 14(5), pages 587-617, December.
    35. Mario Soliño & Begoña A Farizo, 2014. "Personal Traits Underlying Environmental Preferences: A Discrete Choice Experiment," PLOS ONE, Public Library of Science, vol. 9(2), pages 1-7, February.
    36. Plöckinger, Martin & Aschauer, Ewald & Hiebl, Martin R.W. & Rohatschek, Roman, 2016. "The influence of individual executives on corporate financial reporting: A review and outlook from the perspective of upper echelons theory," Journal of Accounting Literature, Elsevier, vol. 37(C), pages 55-75.
    37. Clarkson, Peter M. & Li, Yue & Richardson, Gordon D. & Vasvari, Florin P., 2008. "Revisiting the relation between environmental performance and environmental disclosure: An empirical analysis," Accounting, Organizations and Society, Elsevier, vol. 33(4-5), pages 303-327.
    38. Van de Venter, Gerhard & Michayluk, David & Davey, Geoff, 2012. "A longitudinal study of financial risk tolerance," Journal of Economic Psychology, Elsevier, vol. 33(4), pages 794-800.
    39. H Andrew Schwartz & Johannes C Eichstaedt & Margaret L Kern & Lukasz Dziurzynski & Stephanie M Ramones & Megha Agrawal & Achal Shah & Michal Kosinski & David Stillwell & Martin E P Seligman & Lyle H U, 2013. "Personality, Gender, and Age in the Language of Social Media: The Open-Vocabulary Approach," PLOS ONE, Public Library of Science, vol. 8(9), pages 1-16, September.
    40. repec:eme:aaaj00:09513579210019549 is not listed on IDEAS
    41. repec:eme:aaaj00:eum0000000006264 is not listed on IDEAS
    42. Nazari, Jamal A. & Hrazdil, Karel & Mahmoudian, Fereshteh, 2017. "Assessing social and environmental performance through narrative complexity in CSR reports," Journal of Contemporary Accounting and Economics, Elsevier, vol. 13(2), pages 166-178.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Patrick Hertrampf & Thomas M. Brunner-Kirchmair & Martin R. W. Hiebl & Arnd Wiedemann, 2025. "The Relationship Between CEO Characteristics and Banks’ Risk-Taking: Review and Research Directions [Die Beziehung zwischen CEO-Charakteristika und der Risikobereitschaft von Banken: Literaturüberblick und Forschungsperspektiven]," Schmalenbach Journal of Business Research, Springer, vol. 77(1), pages 127-178, March.
    2. Trinh, Vu Quang & Elnahass, Marwa & Pasiouras, Fotios, 2025. "Personal traits of CEOs and cybersecurity-related disclosure," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 58(C).
    3. F. Cappellieri & R. Vinciguerra & A. Ricciardi & M. Pizzo, 2025. "Independent minority directors against self-serving and manipulative practices in non- financial reporting," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 29(2), pages 453-501, June.
    4. Ralf Barkemeyer & Georges Samara & Stefan Markovic & Dima Jamali, 2023. "Publishing Big Data research in Business Ethics, the Environment and Responsibility: Advice for authors," Business Ethics, the Environment & Responsibility, John Wiley & Sons, Ltd., vol. 32(1), pages 1-3, January.
    5. Muhammad Jameel Hussain & Gaoliang Tian & Adnan Ashraf & Muhammad Kaleem Khan & Lu Ying, 2023. "Chief executive officer ability and corporate environmental sustainability information disclosure," Business Ethics, the Environment & Responsibility, John Wiley & Sons, Ltd., vol. 32(1), pages 24-39, January.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shuili Du & Kun Yu, 2021. "Do Corporate Social Responsibility Reports Convey Value Relevant Information? Evidence from Report Readability and Tone," Journal of Business Ethics, Springer, vol. 172(2), pages 253-274, August.
    2. Karel Hrazdil & Fereshteh Mahmoudian & Jamal A. Nazari, 2021. "Executive personality and sustainability: Do extraverted chief executive officers improve corporate social responsibility?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(6), pages 1564-1578, November.
    3. Shuolei Xu & Fangjun Wang & Charles P. Cullinan & Nanyan Dong, 2022. "Corporate Tax Avoidance and Corporate Social Responsibility Disclosure Readability: Evidence from China," Australian Accounting Review, CPA Australia, vol. 32(2), pages 267-289, June.
    4. Nazari, Jamal A. & Hrazdil, Karel & Mahmoudian, Fereshteh, 2017. "Assessing social and environmental performance through narrative complexity in CSR reports," Journal of Contemporary Accounting and Economics, Elsevier, vol. 13(2), pages 166-178.
    5. Giuseppe Maria Bifulco & Carlo Caserio & Francesca di Donato & Sara Trucco, 2025. "Does Sustainable Performance Matter for Nonfinancial Disclosure Readability? A Fog Index Analysis on Italian‐Listed Companies," Business Strategy and the Environment, Wiley Blackwell, vol. 34(5), pages 5601-5623, July.
    6. Katrin Hummel & Peter Rötzel, 2019. "Mandating the Sustainability Disclosure in Annual Reports—Evidence from the United Kingdom," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 71(2), pages 205-247, May.
    7. Jannik Gerwanski & Othar Kordsachia & Patrick Velte, 2019. "Determinants of materiality disclosure quality in integrated reporting: Empirical evidence from an international setting," Business Strategy and the Environment, Wiley Blackwell, vol. 28(5), pages 750-770, July.
    8. Hossain, Amir & Bose, Sudipta & Shamsuddin, Abul, 2025. "Do integrated report readability and tone convey value relevant information? International evidence," Journal of Contemporary Accounting and Economics, Elsevier, vol. 21(3).
    9. Jia, Jing & Li, Zhongtian, 2022. "Risk management committees and readability of risk management disclosure," Journal of Contemporary Accounting and Economics, Elsevier, vol. 18(3).
    10. Shimamura, Takuya & Tanaka, Yoshitaka & Managi, Shunsuke, 2025. "Evaluating the impact of report readability on ESG scores: A generative AI approach," International Review of Financial Analysis, Elsevier, vol. 101(C).
    11. Peter M. Clarkson & Jordan Ponn & Gordon D. Richardson & Frank Rudzicz & Albert Tsang & Jingjing Wang, 2020. "A Textual Analysis of US Corporate Social Responsibility Reports," Abacus, Accounting Foundation, University of Sydney, vol. 56(1), pages 3-34, March.
    12. Qian Wang & Duowen Wu & Lina Yan, 2021. "Effect of positive tone in MD&A disclosure on capital structure adjustment speed: evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(4), pages 5809-5845, December.
    13. Lu Zhang & Yuan George Shan & Millicent Chang, 2021. "Can CSR Disclosure Protect Firm Reputation During Financial Restatements?," Journal of Business Ethics, Springer, vol. 173(1), pages 157-184, September.
    14. Hrazdil, Karel & Li, Xin & Suwanyangyuan, Nattavut, 2022. "CEO happiness and forecasting," Global Finance Journal, Elsevier, vol. 52(C).
    15. Renato Camodeca & Alex Almici & Umberto Sagliaschi, 2018. "Sustainability Disclosure in Integrated Reporting: Does It Matter to Investors? A Cheap Talk Approach," Sustainability, MDPI, vol. 10(12), pages 1-34, November.
    16. Jonathan A. Boyd, 2026. "From Disclosure to Accountability: Stakeholder Comprehensibility in European Retail and Consumer Goods Sustainability Reporting," Circular Economy and Sustainability, Springer, vol. 6(2), pages 1-29, April.
    17. F. Cappellieri & R. Vinciguerra & A. Ricciardi & M. Pizzo, 2025. "Independent minority directors against self-serving and manipulative practices in non- financial reporting," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 29(2), pages 453-501, June.
    18. Dong Ding & Bin Liu & Millicent Chang, 2023. "Carbon Emissions and TCFD Aligned Climate-Related Information Disclosures," Journal of Business Ethics, Springer, vol. 182(4), pages 967-1001, February.
    19. Zhongtian Li & Jing Jia & Larelle J. Chapple, 2022. "Textual characteristics of corporate sustainability disclosure and corporate sustainability performance: evidence from Australia," Meditari Accountancy Research, Emerald Group Publishing Limited, vol. 31(3), pages 786-816, February.
    20. Mousa, Gehan A. & Elamir, Elsayed A.H. & Hussainey, Khaled, 2022. "The effect of annual report narratives on the cost of capital in the Middle East and North Africa: A machine learning approach," Research in International Business and Finance, Elsevier, vol. 62(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:buseth:v:30:y:2021:i:3:p:338-359. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://onlinelibrary.wiley.com/journal/26946424 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.