On the effect of CEOs’ personal characteristics in transport firm value? A stochastic frontier model Ezzeddine Ben Mohamed a, *, Sami Jarboui a , Amel Baccar b , Abdelfettah Bouri c a Faculty of Economics and Management at Sfax Tunisia, FSEG Sfax, Tunisia b Faculty of Economics and Management at Mahdia Tunisia, Tunisia c Najran University, Saudi Arabia 1. Introduction How a top executive manager in transport firms affects corporate value? The transport literature largely ignored this question while there are some answers from the financial literature since it has been assumed that economic agents and CEOs are fully rational and so manager personal traits cannot affect firm value. The financial literature mainly refers to four theories in order to answer such interrogation: the agency theory (Jensen and Meckling, 1976; Jensen, 1986), the asymmetric information theory (Myers and Majluf, 1984), the corporate governance theory and the behavioral finance which document that some psychological, emotional and cognitive factors can be used to explain distortions on corporate policy and value (Heaton, 2002; Malmendier and Tate, 2005a, 2005b, 2008; Lin et al., 2005; Huang et al., 2011; Campbell et al., 2011). The determinants of firm’s value are dominated by factors that refer to the firm level or the market level but the existing literature largely ignore the possible role that individual managers may play (Bertrnard and Schoar, 2003). Recently, a wave of research papers focus on the effect of CEOs’ personality traits on their decision making (Bertrnard and Schoar, 2003; Hackbarth, 2008; Heaton, 2002; Malmendier and Tate, 2005a,b, 2008; Lin et al., 2005; Huang et al., 2011; Campbell et al., 2011; Ben Fatma et al., 2013; Baccar et al., 2013; Ben Mohamed et al., 2012, 2014a). Their results document that managerial trait of personality can largely affect their management style (Bertrnard and Schoar, 2003), corporate investment decision (Heaton, 2002; Malmendier and Tate, 2005a, 2005b; Lin et al., 2005; Huang et al., 2011), firm’s capital structure and financing decision (Hackbarth, 2008) and firm’s acquisition strategy acquisition (Malmendier and Tate, 2008). A key feature in the existing literature is the absence of studies regarding the effect of such personality traits on firm value. Hence, this paper contributes to the transport literature by investigating the effect of some CEOs’ personal characteristics on firm value. In this paper, we explore the effect of CEOs’ personal characteristics, other than behavioral factors, on firm value. The contribution of this paper on the transport literature is that this is the first paper that seeks to explain why the firms, that operate in the transport sectors, do not arrive to trade in their Case Studies on Transport Policy xxx (2015) xxx–xxx A R T I C L E I N F O Article history: Available online xxx Keywords: CEOs’ personal characteristics Firm value Stochastic frontier approach Transport firms Public transport A B S T R A C T The aim of this paper is to investigate the effect of managerial personal characteristics on his/her firm value. Especially, we seek to determine the impact of CEOs’ age, education nature and tenure on their firm value. In fact, we try to explain why transport firms do not arrive to trade in their optimal value summarized by the Tobin-Q. Using a stochastic analysis frontier model, we generate the optimal firm value that a transport firm can realize if their CEOs act in a full rational way and use their production factors in optimal manner (Q*). We try then to explain the shortfall on firm value that represents the difference between the optimal firm value (Q*) and its observed value (Q). The shortfall (Q*  Q) represents the inefficiency term on transport firm value and it is explained by CEOs’ characteristics. Departing from a sample of 53 transport firms from a multinational context publicly traded from 2000 to 2011, our results show that CEOs’ age and technical education can reduce the shortfall and so increase firm’s value while a long tenure of CEOs can reduce the firm value. Transport firms should be aware that CEOs’ personal characteristics can largely affect their value and policy makers are invited to provide the optimal CEOs’ characteristics that can avoid such distortions on firm value. ß 2015 World Conference on Transport Research Society. Published by Elsevier Ltd. All rights reserved. * Corresponding author. Tel.: +216 50 850 064. E-mail address: benmohamed.ezzeddine@yahoo.fr (E. Ben Mohamed). G Model CSTP-53; No. of Pages 6 Please cite this article in press as: Ben Mohamed, E., et al., On the effect of CEOs’ personal characteristics in transport firm value? A stochastic frontier model. Case Stud. Transp. Policy (2015), http://dx.doi.org/10.1016/j.cstp.2015.01.001 Contents lists available at ScienceDirect Case Studies on Transport Policy jo u rn al h om ep age: ww w.els evier.c o m/lo c ate/c stp http://dx.doi.org/10.1016/j.cstp.2015.01.001 2213-624X/ß 2015 World Conference on Transport Research Society. Published by Elsevier Ltd. 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