Subjective Well-Being of Chief Executive Officers and Its Impact on Stock Market Volatility During the COVID-19 Pandemic in Poland: Agent-Based Model Perspective

Marcin Rzeszutek (), Jørgen Vitting Andersen (), Adam Szyszka and Szymon Talaga ()
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Marcin Rzeszutek: Faculty of Psychology [Warsaw] - UW - Uniwersytet Warszawski [Polska] = University of Warsaw [Poland] = Université de Varsovie [Pologne]
Jørgen Vitting Andersen: UP1 - Université Paris 1 Panthéon-Sorbonne, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique
Szymon Talaga: The Robert B. Zajonc Institute for Social Studies - UW - Uniwersytet Warszawski [Polska] = University of Warsaw [Poland] = Université de Varsovie [Pologne]

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Abstract: This study aimed to connect the behavioral corporate finance perspective (micro level) with complexity theory via agent-based modeling to analyze the impact of selected psychological factors of chief executive officers (CEOs) on stock market volatility (macro level). Specifically, we wanted to explore whether Polish CEOs' subjective well-being (SWB) influenced their managerial decisions during the COVID-19 pandemic and how it might be related to the volatility of stock prices during this critical period in Poland. Our study was based on a survey of Polish CEOs who managed companies listed on the Warsaw Stock Exchange. In particular, 255 CEOs completed the Satisfaction with Life Scale, the Positive and Negative Affect Scale, and a business survey on the impact of the COVID-19 pandemic on company management. Using the results of this survey, we built an agent-based model to investigate how CEOs' decision-making, stemming from their SWB levels, influences the perception of prices by individual traders and, in turn, how it is translated into aggregate stock market volatility. The results indicate the pathways through which the microscopic-level SWB of CEOs influences market price formation at a macroscopic level. The findings obtained from our model may shed new light on the rational expectations theory applied to stock market volatility during the financial crisis.

Keywords: Subjective well-being; CEO; COVID-19; Stock market volatility; Rational expectations theory; Agent-based model (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-hap, nep-hme and nep-tra
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Published in Journal of Happiness Studies, 2024, 25 (7), pp.89. ⟨10.1007/s10902-024-00800-4⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04723512

DOI: 10.1007/s10902-024-00800-4

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