Complementarity in the CEO-CFO interface: The joint influence of CEO and CFO personality and structural power on firm financial leverage

We integrate a person-role fit perspective with recent research on executive personality to explain how and when personality traits reflecting CEOs' and CFOs' potential complementary roles as the firm's visionary leader (extraversion) and corporate conscience (conscientiousness) interact to influence financial leverage. Using a sample of more than 3000 CEO-CFO dyads of S&P 1500 firms from 1997 to 2017, we show that firms with more (less) extraverted CEOs tend to have higher (lower) levels of financial leverage, but that greater CFO conscientiousness buffers this relationship by encouraging more moderate levels of financial leverage at either level of CEO extraversion. We also find that this interaction is less pronounced when the CEO has greater structural power, but more pronounced when the CFO has greater structural power. Our theory and findings extend leadership research by enhancing our understanding of the roles of personality and power in collective leadership settings, and particularly, in encouraging outcomes that better reflect complementarity in the CEOCFO interface.