Emotional intelligence and financial decision making: Are we talking about a paradigmatic shift or a change in practices?

Abstract

The paper investigates the extent to which emotional intelligence has an impact on decision making mainly with regard to financial decisions and their outcomes. Its relevance lies in the fact that despite the remarkable evolution of the literature related to the determinants of financial choices, it is not comprehensively apprehended what really guides managers’ decisions.The study offers a wide support for behavioral finance and demonstrates a paradigmatic shift in exploring financial decisions. The paradigmatic evolution of financial theory has yield to an “invisible” part of the reality which in turn generates some “hidden” costs. At this level, the behavioral financial paradigm becomes relevant to shed some light on the real dynamic of financial decisions. An empirical study based on a survey on 50 Tunisian firms confirms the “partial” influence of emotional intelligence on financial decisions and the detection of a potential to be upgraded. Results show that managers who rely on their emotional intelligence can successfully, on one hand, improve firm’s funding opportunities, and on the other hand avoid overreaching the debt target ratio in such a way to maintain the financial stability of their firms.The study offers insights at two levels: First, educators are urged to integrate emotional intelligence competencies in their teaching objectives. Second, human resource management professionals are invited to reconsider hiring techniques and training methods favorably to detect and develop an emotional intelligence capital.