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 (), Jorgen Vitting Andersen (), Adam Szyszka () and Szymon Talaga ()
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Marcin Rzeszutek: Faculty of Psychology, University of Warsaw
Jorgen Vitting Andersen: Université Paris 1 Panthéon-Sorbonne, Maison des Sciences Économiques
Adam Szyszka: Collegium of World Economy
Szymon Talaga: University of Warsaw

Journal of Happiness Studies, 2024, vol. 25, issue 7, No 7, 15 pages

Abstract: 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
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DOI: 10.1007/s10902-024-00800-4

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