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Revisiting the link between CEO transformational leadership and firm performance: A secondary data analysis

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Original languageEnglish
Publication statusPublished - 2017
Event18th 18th European Congress of Work and Organizational Psychology (EAWOP) - Dublin, Ireland
Duration: 17 May 201720 May 2017

Conference

Conference18th 18th European Congress of Work and Organizational Psychology (EAWOP)
CountryIreland
CityDublin
Period17/05/1720/05/17

Abstract

· Purpose
This study aims to explore the relationship between the CEO transformational leadership and firm financial performance using secondary data to operationalize the studied variables.
· Design/Methodology
We used a random sample comprising 50 CEOs of large, publicly listed US and European companies. We evaluated their transformational leadership drawing upon newspaper articles which were first content analyzed into specific CEO profiles. A panel of four judges rated the CEOs on their transformational leadership using these profiles. Firm performance was obtained from Thomson Datastream.
· Results
We found significant associations between intellectual stimulation, inspirational motivation, and individualized consideration and different financial performance indicators, respectively. These findings remained significant after controlling for firm size and CEO tenure.
· Limitations
Although random sampling of the largest and most established US and European companies was used, the sample was composed of only 50 companies. Also, the secondary data composed of press articles that we used to code the CEOs’ leadership styles might be biased based on companies’ performance.

· Research/Practical Implications
Despite the considerable methodological difference in assessing the CEO transformational leadership compared to past research, our findings largely support the previous studies about the positive role of CEO transformational leadership for firm performance.
· Originality/Value
We contribute further evidence to the link between the CEO transformational leadership and firm financial performance by relying exclusively on secondary data which allowed us to focus on the world's largest companies. Primary data on these companies’ CEOs leadership style would be very difficult, if not impossible, to collect.

Event

18th 18th European Congress of Work and Organizational Psychology (EAWOP)

17/05/1720/05/17

Dublin, Ireland

Event: Conference

ID: 31547521