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SINGAPORE - Media OutReach - 4 November 2015 -

 

1) Humble CEOs bring companies higher returns

 

Companies with humble chief executive officers (CEO) enjoy higher Return on Assets (ROA), according to new research by the NUS Business School.

 

In a recent study examining the relationship between CEO humility and company profits, Dr. Amy Ou Yi (bizyo@nus.edu.sg), Assistant Professor of Management and Organization, found a positive link between CEOs rated as 'humble' by their chief financial officers (CFOs) and their firms' ROA.

 

The research paper has just been published online in the Journal of Management. The study examined 105 firms in the United States' computer software and hardware industry, with CFOs reporting on their CEOs' humility through a nine-item survey. The survey included questions such as "My CEO actively seeks feedback, even if it is critical", "My CEO acknowledges when others have more knowledge and skills than him/her", "My CEO takes notice of the strengths of others", and "My CEO is willing to learn from others".

 

The survey questions were aimed at identifying CEOs who possess the traits of humility, including being more self-aware, of not only their strengths but also their weaknesses; being open to feedback and improvement; appreciating others' strengths and contributions; being driven by collective missions that are greater than self-interest; and being willing to forego their personal self-glory for the greater good of the company.

 

"The implications of our findings are significant. It is typically assumed that the humble person is not assertive, lacks confidence, and the ability to motivate others. At worst, humility has been equated with being weak. Our study challenges that belief, showing that humble CEOs are more than just nice to work with and they are able to deliver extraordinary firm performance," said Dr Ou.

 

She added: "The constantly changing world demands at least two sets of skills from companies and the CEOs who lead them. One is the ability to be innovative, to explore and discover new opportunities. The second is the ability to exploit the existing resources within the company. The balance is important. Humble CEOs are able to create highly integrative top management teams who tap into both skill sets, allowing the firm to adopt an ambidextrous strategic orientation. Such teams collaborate better, share information openly, make joint decisions, and work towards a shared vision."

 

The full research paper can be downloaded at

http://jom.sagepub.com/content/early/2015/09/21/...

 

2) Faking one's emotions makes one an abusive supervisor

 

The mentally draining task of faking one's emotions to adhere to certain workplace policies, such as rules on providing 'service with a smile', can make supervisors more abusive, according to new research by Dr. Sam Yam (bizykc@nus.edu.sg), Assistant Professor of Management and Organization, which will be published in a forthcoming 2016 issue of the Journal of Applied Psychology.

                               

Through a survey of 184 employees and their leaders working in customer service and sales roles, the research found that leaders who reported doing more 'surface acting', such as faking a good mood or suppressing anger in front of customers, tended to be seen as abusive supervisors by their staff, because surface acting deprives these bosses of the mental resources to rein in abusive behavior.

 

However, supervisors who had a higher degree of self-control as a personality trait were less likely to become abusive from surface acting, according to the study.

 

"Our findings are significant because they open the door to more intervention options. For instance, service organizations might want to reconsider how they encourage their staff to provide good service. While forcing employees to smile and suppress other emotions might help a company's image, such practices also risk compromising supervisor-staff relationships in the long run," said Dr Yam.

 

He added: "Our research suggests that abusive supervision can be mitigated by replenishing the supervisors' mental resources and hence, their resources for self-control. For instance, organizations can help employees regain their self-control resources by encouraging them to take short breaks at work. Likewise, self-affirmation training can enable individuals to replenish depleted resources. Together, research points to a wide array of interventions through which organisations can reduce abusive supervision."

 

The full paper can be downloaded at:

http://static1.squarespace.com/static/52be2693e4b0697bbec87ab3/...

 

 

3) Disguised corruption in China through credit cards

 

Some banks in China have been issuing bureaucrats with higher credit lines than those given to non-bureaucrats, until the recent crackdown on corruption in the country, suggesting that credit cards have been used as a disguised form of corruption, according to fresh research by Professor Sumit Agarwal (bizagarw@nus.edu.sg) of the Department of Finance at NUS Business School.

 

According to the Asian Bureau of Finance and Economic Research (ABFER) Digest in September 2015, the study covered all provinces in mainland China and credit card data of close to one million consumers.

 

The research found that Chinese banks issued credit lines that were on average 14 percent higher than those they issued to non-bureaucrats. This credit premium was also almost 18 percent greater among higher-ranked bureaucrats, compared to those ranked lower, indicating that banks favored bureaucrats who had more power to help them in their operations.

 

Additionally, the study found that even though bureaucrats had higher average delinquency rates compared to non-bureaucrats, the delinquent accounts of bureaucrats had a higher probability of being reinstated, than those of non-bureaucrats.

 

A noteworthy finding was that while regular customers with delinquent accounts paid off their debt quickly to avoid high interest charges and to be reinstated, delinquent bureaucrat accounts took a longer time to be reinstated, suggesting that the latter achieved account reinstatement only when banks wrote off the debt.

 

However, the crackdown in corruption appears to have had an effect. The study found a smaller difference between the credit line premiums of bureaucrats' credit card accounts in the first year after the crackdown, compared to bureaucrat accounts that were opened prior to the crackdown.

 

The delinquency rate and likelihood of reinstatement for existing and new bureaucrats' credit card accounts also fell during the first year after the crackdown, making them no different from accounts of non-bureaucrat customers.

 

"The lack of transparency and governance in China's credit card system makes it a potentially important and viable vehicle for corruption. It can potentially be used as an implicit bribe to government officials. Our research is significant as it not only shows that the corruption crackdown has had a good effect, it has also revealed a corruption mechanism that may have been missed by policymakers," said Professor Agarwal.

 

The abstract can be downloaded at:

http://abfer.org/docs/abfer-sept-digest-2015.pdf

 

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