Does CEO emotional intelligence affect the performance of the diversifiable companies?

Abstract

This article scrutinizes the leader’s emotional intelligence effect on the enterprises’ performance (diversification is the main strategy). After the theoretical discussion which approaches our subject matter, we propose our research assumptions. Thus, this research attempts to answer our central question: How can emotional intelligence affect the performance of Tunisian enterprises (diversifiable companies)? Our methodology consists of two parts. The first is used to identify the data sample selection and the second is devoted to the results interpretation. The main contribution of this work is to explain how the behavioral finance (we speak about emotional intelligence) allows to present answers regarding performance of companies (which the strategy the adopted is the diversification). The results obtained from the linear regressions made on a sample of the show well the significant and positive CEO emotional intelligent on the financial, social and environmental performance.

Keywords:

• diversification
• emotional intelligence
• social performance
• financial performance
• environmental performance

Public Interest Statement

The executive decision to adopt diversification strategy as a source of value may affect the corporate performance. According to the cognitive theory, the leader can use his emotions to achieve better performance because the business decision-making may be affected by the leader's emotions. This recent concept in the field of management becomes a research topic of a growing importance. The emotions, such as fear, happiness and surprise, play a vital role in making decisions. The effect of such emotions may be either positive, here we mean the “emotional intelligence,” or negative, or here we talk about the “behavioral biases” of emotional origin. So, performance is not only related to the competence and the team working skills, but also to the internal competence which is called “emotional intelligence.” In this context, we can talk about a trend in psychology, behavioral finance, and management sciences.

Notes

1. Rating agency which estimates large companies quoted Americans (together of the indication (index) Russel 3000) according to a series of criteria of exclusion (example: alcohol, tobaccos …) and of criteria of evaluation (Human resources, environment, sponsorship, customers …).

Additional information

Funding

Funding. The authors received no direct funding for this research.

Notes on contributors

Ferdaws Ezzi

Ferdaws Ezzi holds a PhD in Finance. Her main research interests are related to corporate finance, behavioral finance business, corporate governance and Business Ethics as well.

Mouhamed Ali Azouzi

Azouzi Mohamed Ali is an assistant professor in finance and accounting methods faculty of management Mahdia-Tunisia and an associate editor in emotional finance “Journal of Behavioral Economics Finance, Entrepreneurship, Accounting and Transport.” He is expert in corporate finance, behavioral finance business, corporate governance, corporate financial policy, financial structure, investment decisions, and emotional intelligence. He is member of the editorial board of “African Journal of Business Management (AJBM)” and “International Research Journal of Management and Business Studies.”

Anis Jarboui

Anis Jarboui holds a PhD in Finance. He is currently a Professor of Finance at the University of Sfax, Tunisia. His main research interests are related to corporate governance, finance, and new problems of the value as well.