Effects of leadership styles on hotel financial performance

Purpose – The purpose of this paper is to examine the effects of leadership styles on financial performance. Although the importance of leadership styles has been recognized in practice and academia, little research has focused on the impact of leadership on financial performance in hospitality and tourism industry. Design – The paper first defines motives, leadership styles, leaders’ experiences, and Linguistic Inquiry and Word Count (LIWC). It then uses quasi-experimental design to predict the impacts of leadership styles and leaders’ experiences on financial performance. Methodology – The study has conducted partial least square regression to find the effects of leadership styles and leaders’ experiences on financial performance of the hotel companies. Approach – Vision statements of the publicly traded hotel companies are transferred into motives and leadership styles using the LIWC. Findings – Transformational leadership and longer-tenured CEOs with high power and affiliation motives are associated with return on equity (ROE) whereas transactional leadership and older CEOs with high achievement motive affect return on assets (ROA). Originality of the research – The study opens a new approach to quantify the vision statements using LIWC and contributes to the relationship of leadership styles, leaders’ experiences, and financial performance.