Investigating the Relationship between Managerial Personality Characteristics and Dividend Policy

Objective: Economic psychology’s research suggests that personality traits are associated with wealth accumulation or allocation decision making. Since dividend policy is also a wealth accumulation decision at the company level, it is likely to be affected by the personality traits of the management...

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Autores principales:	Mohammad Hossein Setayesh, Issa Karimipoor
Formato:	article
Lenguaje:	FA
Publicado:	Shahid Bahonar University of Kerman 2020
Materias:	dividend policy management personality traits Accounting. Bookkeeping HF5601-5689
Acceso en línea:	https://doaj.org/article/aac3a5685f8e4393aa221f598c408ecd
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spelling	oai:doaj.org-article:aac3a5685f8e4393aa221f598c408ecd2021-11-04T19:56:32ZInvestigating the Relationship between Managerial Personality Characteristics and Dividend Policy2008-89142476-292X10.22103/jak.2020.15587.3222https://doaj.org/article/aac3a5685f8e4393aa221f598c408ecd2020-12-01T00:00:00Zhttps://jak.uk.ac.ir/article_2763_94ea1bda6bc7b8ea3c5093baf0b7501e.pdfhttps://doaj.org/toc/2008-8914https://doaj.org/toc/2476-292XObjective: Economic psychology’s research suggests that personality traits are associated with wealth accumulation or allocation decision making. Since dividend policy is also a wealth accumulation decision at the company level, it is likely to be affected by the personality traits of the management team. According to Upper Echelons' theory (UE), decisions of the senior management team can affect the company's financial performance. Although many studies have reported the effects of the characteristics of the management team on financial strategies, few studies have examined the personality traits and their effects on financial strategies. The purpose of this study is to examine the relationship between managerial personality traits and dividend policy in the companies listed on the Tehran Stock Exchange. Methods: The personality trait criterion consists of five specific personality characteristics, including agreeableness, conscientiousness, neuroticism (emotional instability), extraversion, and openness to experience. Big five personality characteristics are considered the most widely accepted glossary of personality traits. The use of this model has increased in financial and economic researches. A major challenge to examine the effects of executive personality is the cost and difficulty of measuring. Measuring personality traits usually requires the use of costly tools or in-depth interviews that are especially difficult for large samples. To measure these personality variables, we used the short form of the NEO personality questionnaire. In the short model, 12 questions measure each factor. Many countries have approved the short form of the questionnaire. To measure earnings policy, we used two variables of dividend to sales ratio and dividend to net profit after tax. The statistical sample consists of 71 companies listed in the Tehran Stock Exchange from 2008 to 2017, and the questionnaire’s participants are the CEO or CFO of these companies. In this study, we used a quasi-experimental design and a post-event approach. To test the hypotheses, we used a structural equations model (version 3 of Smart PLS software). Results: The results of this study provide new insight into the factors affecting dividend payout policy. The results showed that after controlling the variables of firm size, growth of profitability, and growth of opportunities, there is a negative and significant relationship between agreeableness and dividend policy and a positive and significant relationship between management conscientiousness and dividend policy. This study also showed no significant relationships between each of the three personality traits (neuroticism, extraversion, and Openness to Experience) and dividend policy. Conclusion: The findings indicate that some personality traits have affected the corporate dividend policy. The results confirm the Upper Echelons theory and show that the characteristics of the top management team affect a company's financial choices and performance. Due to the effect of personality traits on financial practices, companies need to use psychological and personality interviews in addition to scientific interviews to select their managers. To determine companies' financial strategies, investors and financial analysts need to consider the factors beyond the financial and accounting variables, such as behavioral and personality characteristics of corporate executives.Mohammad Hossein SetayeshIssa KarimipoorShahid Bahonar University of Kermanarticledividend policymanagementpersonality traitsAccounting. BookkeepingHF5601-5689FAمجله دانش حسابداری, Vol 11, Iss 4, Pp 149-170 (2020)
institution	DOAJ
collection	DOAJ
language	FA
topic	dividend policy management personality traits Accounting. Bookkeeping HF5601-5689
spellingShingle	dividend policy management personality traits Accounting. Bookkeeping HF5601-5689 Mohammad Hossein Setayesh Issa Karimipoor Investigating the Relationship between Managerial Personality Characteristics and Dividend Policy
description	Objective: Economic psychology’s research suggests that personality traits are associated with wealth accumulation or allocation decision making. Since dividend policy is also a wealth accumulation decision at the company level, it is likely to be affected by the personality traits of the management team. According to Upper Echelons' theory (UE), decisions of the senior management team can affect the company's financial performance. Although many studies have reported the effects of the characteristics of the management team on financial strategies, few studies have examined the personality traits and their effects on financial strategies. The purpose of this study is to examine the relationship between managerial personality traits and dividend policy in the companies listed on the Tehran Stock Exchange. Methods: The personality trait criterion consists of five specific personality characteristics, including agreeableness, conscientiousness, neuroticism (emotional instability), extraversion, and openness to experience. Big five personality characteristics are considered the most widely accepted glossary of personality traits. The use of this model has increased in financial and economic researches. A major challenge to examine the effects of executive personality is the cost and difficulty of measuring. Measuring personality traits usually requires the use of costly tools or in-depth interviews that are especially difficult for large samples. To measure these personality variables, we used the short form of the NEO personality questionnaire. In the short model, 12 questions measure each factor. Many countries have approved the short form of the questionnaire. To measure earnings policy, we used two variables of dividend to sales ratio and dividend to net profit after tax. The statistical sample consists of 71 companies listed in the Tehran Stock Exchange from 2008 to 2017, and the questionnaire’s participants are the CEO or CFO of these companies. In this study, we used a quasi-experimental design and a post-event approach. To test the hypotheses, we used a structural equations model (version 3 of Smart PLS software). Results: The results of this study provide new insight into the factors affecting dividend payout policy. The results showed that after controlling the variables of firm size, growth of profitability, and growth of opportunities, there is a negative and significant relationship between agreeableness and dividend policy and a positive and significant relationship between management conscientiousness and dividend policy. This study also showed no significant relationships between each of the three personality traits (neuroticism, extraversion, and Openness to Experience) and dividend policy. Conclusion: The findings indicate that some personality traits have affected the corporate dividend policy. The results confirm the Upper Echelons theory and show that the characteristics of the top management team affect a company's financial choices and performance. Due to the effect of personality traits on financial practices, companies need to use psychological and personality interviews in addition to scientific interviews to select their managers. To determine companies' financial strategies, investors and financial analysts need to consider the factors beyond the financial and accounting variables, such as behavioral and personality characteristics of corporate executives.
format	article
author	Mohammad Hossein Setayesh Issa Karimipoor
author_facet	Mohammad Hossein Setayesh Issa Karimipoor
author_sort	Mohammad Hossein Setayesh
title	Investigating the Relationship between Managerial Personality Characteristics and Dividend Policy
title_short	Investigating the Relationship between Managerial Personality Characteristics and Dividend Policy
title_full	Investigating the Relationship between Managerial Personality Characteristics and Dividend Policy
title_fullStr	Investigating the Relationship between Managerial Personality Characteristics and Dividend Policy
title_full_unstemmed	Investigating the Relationship between Managerial Personality Characteristics and Dividend Policy
title_sort	investigating the relationship between managerial personality characteristics and dividend policy
publisher	Shahid Bahonar University of Kerman
publishDate	2020
url	https://doaj.org/article/aac3a5685f8e4393aa221f598c408ecd
work_keys_str_mv	AT mohammadhosseinsetayesh investigatingtherelationshipbetweenmanagerialpersonalitycharacteristicsanddividendpolicy AT issakarimipoor investigatingtherelationshipbetweenmanagerialpersonalitycharacteristicsanddividendpolicy
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Investigating the Relationship between Managerial Personality Characteristics and Dividend Policy

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