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CEO emotional intelligence and board of directors' efficiency

CEO emotional intelligence and board of directors' efficiency Purpose – This paper deals with the relationship existing between the emotional aspect and decision‐making processes. More specifically, it examines the links between emotional intelligence, decision biases and effectiveness of the governance mechanisms. The primary purposes of this paper are to: consider emotional intelligence as new research ideas that make important contributions to society; offer suggestions for improving manuscripts submitted to Consortium for Research on Emotional Intelligence in Organizations; and discuss methods for enhancing the validity of inferences made from research. Design/methodology/approach – The paper explains that the main cause of organization's problems is CEO emotional intelligence level. The authors use three models (linear regression and logistic binary regression) to examine this relation: every model treats the relationship between emotional intelligence and one of efficiency criteria of the board. Emotional intelligence has been measured according to Schutte et al. 's Shutte Self Report Emotional Intelligence Scale (SSREI), with a high internal validity level. The four cognitive biases have been measured by means of a questionnaire comprising several items and the selected sample was composed of some180 Tunisian executives (belonging to 60 firms). Findings – The results revealed that the presence of a high emotional intelligence rate is not always positively correlated with the executives' suggestibility with respect to behavioural biases. They have also affirmed the existence of a complementarity relationship between emotional intelligence and the directors' board. Authors need to consider that emotion which minimizes CEO emotional biases and provides director's board effectiveness. Research limitations/implications – This article has implications for the development of CEO emotional intelligence capacity. Also, some psychological aspects of a theoretical nature could not be wholly approached in a complete empirical way. Practical implications – The paper pushes organizations to select managers based on their levels of emotional intelligence (apply tests of emotional intelligence in place psychometric tests). Also, it increases the validity of inferences made from research in the field. Social implications – This paper incites governments to establish training programs aimed at the development of learning of emotional intelligence. Thus, it has important implications for enhancing the well‐being of individuals, organizations and society as a whole. Originality/value – Actually, for the sake improving the explanatory power of a legal‐financial approach of governance, the behavioural dimension has been integrated for a more thorough analysis of the directors' board role. The authors' goal consists in highlighting the role played by emotional intelligence as a skill or tool available for the manager or controller to minimize the behavioural biases (bias of loss aversion, optimism, over‐confidence and lack of cognitive flexibility), and achieves an effective control. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Corporate Governance Emerald Publishing

CEO emotional intelligence and board of directors' efficiency

Corporate Governance , Volume 13 (4): 19 – Aug 2, 2013

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Publisher
Emerald Publishing
Copyright
Copyright © 2013 Emerald Group Publishing Limited. All rights reserved.
ISSN
1472-0701
DOI
10.1108/CG-10-2011-0081
Publisher site
See Article on Publisher Site

Abstract

Purpose – This paper deals with the relationship existing between the emotional aspect and decision‐making processes. More specifically, it examines the links between emotional intelligence, decision biases and effectiveness of the governance mechanisms. The primary purposes of this paper are to: consider emotional intelligence as new research ideas that make important contributions to society; offer suggestions for improving manuscripts submitted to Consortium for Research on Emotional Intelligence in Organizations; and discuss methods for enhancing the validity of inferences made from research. Design/methodology/approach – The paper explains that the main cause of organization's problems is CEO emotional intelligence level. The authors use three models (linear regression and logistic binary regression) to examine this relation: every model treats the relationship between emotional intelligence and one of efficiency criteria of the board. Emotional intelligence has been measured according to Schutte et al. 's Shutte Self Report Emotional Intelligence Scale (SSREI), with a high internal validity level. The four cognitive biases have been measured by means of a questionnaire comprising several items and the selected sample was composed of some180 Tunisian executives (belonging to 60 firms). Findings – The results revealed that the presence of a high emotional intelligence rate is not always positively correlated with the executives' suggestibility with respect to behavioural biases. They have also affirmed the existence of a complementarity relationship between emotional intelligence and the directors' board. Authors need to consider that emotion which minimizes CEO emotional biases and provides director's board effectiveness. Research limitations/implications – This article has implications for the development of CEO emotional intelligence capacity. Also, some psychological aspects of a theoretical nature could not be wholly approached in a complete empirical way. Practical implications – The paper pushes organizations to select managers based on their levels of emotional intelligence (apply tests of emotional intelligence in place psychometric tests). Also, it increases the validity of inferences made from research in the field. Social implications – This paper incites governments to establish training programs aimed at the development of learning of emotional intelligence. Thus, it has important implications for enhancing the well‐being of individuals, organizations and society as a whole. Originality/value – Actually, for the sake improving the explanatory power of a legal‐financial approach of governance, the behavioural dimension has been integrated for a more thorough analysis of the directors' board role. The authors' goal consists in highlighting the role played by emotional intelligence as a skill or tool available for the manager or controller to minimize the behavioural biases (bias of loss aversion, optimism, over‐confidence and lack of cognitive flexibility), and achieves an effective control.

Journal

Corporate GovernanceEmerald Publishing

Published: Aug 2, 2013

Keywords: Corporate governance; Boards of directors; Chief executives; Emotional intelligence; Cognitive bias

References