University of Arkansas

Walton College

The Sam M. Walton College of Business

The Role of CEO Personal Attributes on the IPO Pricing Process

Man smiling with numbers in the background
February 13, 2024  |  By Alyssa Riley; Oleg V. Petrenko

Share this via:

In the fast-paced world of business, where success can seem fleeting, few names evoke as much reverence and fascination as that of Steve Jobs. Imbued with confidence, vision, and magnetic charisma, he redefined what it means to lead a company. His now iconic black turtleneck, glasses, and trim beard are synonymous with Apple itself. Suffice it to say, the company’s decades of success, financial and cultural, are due to his personality and leadership style. The personality of a CEO so often defines how that company is perceived by others, but how significant is it during the initial public offering (IPO) pricing process?  

IPO firms, companies that are going public by issuing shares of their stock to the general population for the first time, are a major component of the stock market. To do this, firms rely heavily on investment bankers to make the transition from privately owned to a publicly traded entity.  

In the realm of entrepreneurship, stock, and finances, investment bankers are constantly faced with making two of the most important decisions concerning IPO firms: setting their offer price range and determining the actual offer price. To firm CEOs, the verdict that they long to hear from investment bankers is one of high offer prices and small offer price ranges, but it comes with a specific determinant – personality.  

Being humble is not regularly considered a negative quality in society, but when it comes to CEOs, investment bankers and stakeholders are looking for business leaders with personal attributes suited for negotiations, decision-making, and interpreting strategic situations. This sought-after trait is charisma, and the more of it that firm CEOs have, the better.  

In “Do the personal attributes of CEOs matter in the IPO pricing process? An examination of charisma and humility,” Oleg V. Petrenko (University of Arkansas), Jeffrey A. Chandler (University of North Texas), Nathan Hayes (Louisiana State University), Frederico Aime (Oklahoma State University) and Andrew B. Blake (Texas Tech University) investigate the importance of CEO characteristic traits – charisma and humility – on pricing decisions throughout the IPO process.  

Charisma vs. Humility 

Petrenko’s research focuses on CEO characteristics, specifically charisma and humility, as the pivotal factors that influence negotiating decisions, offer prices, and investments. Charisma, as defined by the study, denotes personal charm, attractiveness, and persuasive communication. Humility refers to a self-view of accepting that something is greater than the self, revealing itself in “self-awareness, openness to feedback, appreciation of others, low self-focus, and self-transcendent pursuit.” 

A crucial insight of the study is the importance of considering these personality traits when making big decisions in a company, namely whether to take it public. Companies and their boards should not just look at the firm CEO’s qualifications and experience. They should also consider their personality and leadership style.  

Since these decisions have significant implications for the entire business world, digging deeper into how CEOs' attributes affect negotiation tactics, pricing decisions, and the IPO process will provide important insights.  

Investment bankers and institutional investors may seem to be rational decision-makers but often use their experiences, values, and beliefs to reflect reality. Therefore, their pricing decisions are mostly subjective, as they rely heavily on easily available information for CEO attributes, which can be influenced by the firms themselves. 

Understanding how CEO characteristics influence investor perception and, therefore, pricing decisions can help stakeholders assess the potential risk associated with investing in firms. Both charisma and humility create different perceptions about a company’s quality, since firms often reflect the traits of their CEOs and affect how negotiations play out. 

For instance, companies led by humble CEOs tend to attract less investment interest and may struggle in negotiations. Charismatic CEOs, however, often secure higher offer prices for their companies during IPOs.  

CEOs can embody both charisma and humility, but charisma is essential in gaining investor confidence. For example, an attribute that made Sam Walton so popular among the people was his personal brand of humility. Now a Walmart Museum staple, his 1979 Ford F150 symbolizes his nature of frugality, modesty, and folksiness. His magnetism and larger-than-life charisma in his professional life made him one of the most successful CEOs in the world.

In short, this research underscores the pivotal role of CEO characteristics in influencing investors and bankers, which, as a result, shape the outcomes of IPOs. The broader implications of these traits on investor confidence, corporate governance, and risk assessment in the dynamic world of IPOs, should not be ignored.  

Guiding Investment Bankers  

Although this study shows the pioneering effort to delve into the impact of CEO personality traits on pricing decisions, entrepreneurship researchers have long been captivated by the intricacies of how investment bankers arrive at pricing decisions. This process can be broken down into two distinct phases: assessment and negotiation.  

The first phase, concerning IPO pricing decisions, revolves around assessing investor interest. Investment bankers use the book-building method, which establishes a price range before finalizing the offer price for the IPO firm. This price range essentially reflects their confidence in the firm. The smaller the price range and the larger the price offer, the better. The second phase involves negotiations between investment bankers and the IPO firms. 

Petrenko, Chandler, Hayes, et al. build upon existing research by uncovering the precise factors that guide investment bankers when making these critical decisions. Numerous attributes of IPOs influence both investor interest and the firm’s ability to negotiate a suitable offer price. These factors, in turn, mold the final pricing decision made.  

Petrenko predicts that charismatic CEOs will significantly sway the IPO pricing process directed by investment bankers. Not only do they anticipate that firms led by charismatic CEOs will receive narrower offer price ranges, but also attract greater interest from investors during their roadshow presentations, conveying a perception of higher performance potential. Consequently, this heightened interest will increase interest from investment bankers, ultimately leading to higher offer prices.  

Society’s Investment in Investing 

While heavily focusing on the impacts on IPO firms, investment bankers, and institutional investors, this study’s findings matter to all stakeholders. Many people invest their money in stocks, including those offered by IPO firms, so understanding these effects helps investors make more informed decisions. As consumers, society often interacts with the products and services offered by IPO firms. CEO traits that affect performance and stock value can indirectly influence what is available to use and at what cost. Therefore, successful IPOs contribute to economic growth and prosperity, while poorly managed ones can lead to financial instability, affecting the job market as well.  

To understand how these implications materialize, Petrenko identifies and collects data on all IPO firms in the U.S. market, firm CEOs and their personality traits, finances, performances, offer prices, and offer price ranges. Humble CEOs should expect large IPO offer price ranges and reduced offer prices. Furthermore, charismatic CEOs should expect reduced IPO offer price ranges and large offer prices. CEO attributes substantially influence two of the most impactful decisions of the IPO process.  

The researchers even present a counterintuitive notion to entrepreneurship research: investment bankers rely as much on subjective information, like CEO personality traits, as objective information, like firm and board characteristics, when making pricing decisions. 

Visibility in the Financial Landscape 

Exploring the impact of CEO personality traits on pricing decisions in the IPO process, this research highlights the broader implications of how charisma and humility influence investor perception, confidence, and IPO outcomes. These findings matter for investors, consumers, job markets, economies, and societal well-being, as they may empower individuals to make informed financial decisions and promote ethical business and investing practices. In the contemporary financial ecosystem, these decisions hold immense weight and can significantly impact IPO firms. 

When charismatic CEOs lead IPO firms, there may be an increased sense of optimism and confidence, driving more people to participate in these offerings. Humble CEOs may be seen as less assertive or confident in their company’s prospects, leading to more conservative pricing. However, investors must remain vigilant and conduct thorough examinations, as personality alone does not guarantee the success of a company.  

Since the stock market has become a mainstream pursuit for people from all backgrounds and walks of life, this research has far-reaching implications for everyone, not just stakeholders and business professionals. IPO firms play a pivotal role in this new financial world, relying heavily on investment bankers to transition from private ownership to public trading. Pricing decisions critically affect stock market performance, citizens’ investment choices, overall wealth accumulation, and financial well-being. Their effects even extend to the products and services offered by IPO firms, as these funds are often used for expansion, innovation, and growth!  

The researchers identify the importance of the visibility of a CEO in the success of a company. After Jobs’ death in 2011, his successor, Tim Cook, largely continued the legacy of innovation, diversification, global expansion, social responsibility, and investor relations that we associate with the global tech giant. Apple’s continued success rests heavily on the personalities and visibility of its leaders. Strong personality types act as a gravitational pull for investors, and, thus, attractive pricing decisions for IPO firms.  


Oleg V. Petrenko is an Assistant Professor in the Strategy, Entrepreneurship, Venture and Innovation Department at the Sam M. Walton College of Business at the University of Arkansas. He received his PhD from Oklahoma State University. His research broadly focuses on the micro-foundations of strategy in large corporation and new venture contexts. Specifically, he is interested in examining the psychology of executives and entrepreneurs and how it impacts strategic decision-making and firm performance. 

Alyssa RileyAlyssa Riley is a first-year graduate student earning her master’s degree in News Narrative Journalism. Attending the University of Arkansas as an undergraduate student, she earned her bachelor’s degree in News Editorial Journalism while working in numerous writing, editing and social media roles. In addition to writing for Walton Insights, she has begun her fourth semester as a staff writer for the University’s Hill Magazine and freelances for Celebrate! Arkansas Magazine. After earning her master's, Alyssa hopes to work in the magazine industry, specifically covering arts and culture, entertainment and lifestyle genres.