Upper echelons theory says CEO personality shapes firm outcomes by framing risks and opportunities and influencing interactions with colleagues. We can think of the effects via an input (personality), throughput (things CEOs control like M&A, TMT pay), and output (firm performance) framework. Research is mostly Western and overemphasises dark traits like narcissism but other cultures and trait clusters need attention, e.g., pro-social traits. We should tailor governance to CEO profiles, train directors to recognise personality behaviour, and treat assessment as due diligence.
Source: Borgholthaus, Harms, White, Villalpando & Bourgoin (2026).
