How leadership style and values of Australian CEOs are reflected in the financial decisions made

Western Sydney University thesis: Doctoral thesis

Abstract

This study investigated the effect of leadership style and values of Australian Chief Executive Officers (CEOs) on the financial decisions that were made. This research did not examine the effect of CEO remuneration or why the CEO took the job, but rather took a mixed method approach to investigating the values of the Australian CEO, the CEO leadership style, and the relationship these have to financial decision-making in the organization. The reason for choosing these leaders, CEOs of Australian companies, is the potential effects of their decision making on many stakeholders whether they are employees, shareholders or society at large. This study was designed to identify the perceived or espoused values of the Australian CEO and to test the influence of these values via semi-structured interviews focussing on financial decisions that the CEOs have made. The study was conducted in two phases. A pilot study was conducted to ensure that the data collected would enable the research questions to be answered. The pilot study assessed the effectiveness of initial chosen data collection methods; the moral reasoning inventory survey (MRI) and the semi-structured interview. Following the pilot study the espoused values survey tool (EVST) collection method was added to the methodology of the study. Phase 2 of this study was the implementation of the established data collection methods to investigate how the leadership style and values of an Australian CEO were reflected in the financial decisions that were made. A total of ten CEOs were interviewed. Both quantitative and qualitative data were collected during the study. A survey was implemented; the (EVST) to identify the perceived (espoused) values of the CEO, and financial statements were used to identify financial decisions that had been made. Participant interviews involved the completion of a moral reasoning survey (MRI), the EVST along with semi-structured questions. The questions were designed to ascertain whether the espoused values identified in the EVST were displayed by the CEO. The combination of the data collection methods were analyzed to identify the leadership styles and values of the Australian CEOs and how these were reflected in financial decisions made. In summary a direct relationship was found between a transactional leadership style and the competency values of logical (IV13) and responsible (IV17). Although more than fifty percent of CEOs espoused and displayed the moral values of helpful (IV8) and honest (IV9), the connection to the transactional leadership style is not clear. The other values that the CEOs displayed when making a financial decision were a positive business attitude (BA3), a focus on business finances (FI1) and a risk-averse (RM1) approach. As a group, all the CEOs consistently used the economic point of view of decision making. The findings of this study support the qualitative methodology used to better understand CEO values and the effect on financial decision-making. It allowed for in-depth data to be collected establishing a list of CEO characteristics. An extension of CEO traits beyond Rokeach's (1974) values resulted from the semi-structured interview and observations recorded in the research journal. The use of the quantitative survey instruments alone (EVST and MRI) would not have produced this comprehensive list. Furthermore, Rokeach's values focused on only positive values and made it difficult to highlight any negativity that may have been displayed by the participants, restricting the list of CEO characteristics. This negativity was highlighted in the nodes which were established during the analysis phase, covering business attitude and risk management. The leadership style and decision-making focus also added to the previously reported CEO characteristics. This study has established traits additional to Rokeach's instrumental values, which should be included in future research, for a fuller picture to be gained of CEO decision-making. These findings enrich the current values and leadership literature. The proposed CEO training from this study will increase an organization's contribution to society by providing an opportunity to expose the CEO to a wider world view. This view may encourage authentic leaders which make financial decisions utilising the three views of decision-making, the economic, the legal and the moral, rather than CEOs who focus primarily on the economic view.
Date of Award2017
Original languageEnglish

Keywords

  • chief executive officers
  • decision making
  • leadership
  • corporations
  • finance
  • Australia

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