Investors might actually respond better if a CEO is candid about flaws, a working study from the University of Maryland found. The findings reveal CEOs who show vulnerability are more likely to gain investors’ trust, even if they later share bad news like below-expectation forecasts and earnings. CEOs like Microsoft boss Satya Nadella have espoused the importance of opening up as part of their leadership philosophy.
As workers delegate more tasks to AI, empathy has become even more important, Microsoft CEO Satya Nadella believes.
Nadella has long espoused empathy is not a “soft skill” because it’s one of the hardest to learn. In an interview with Axel Springer CEO Mathias Döpfner last month, the tech executive said emotional intelligence, or EQ, is only becoming a more crucial trait for workplace trailblazers.
“IQ has a place, but it’s not the only thing that is needed in the world,” Nadella said. “And I’ve always felt at least as leaders, if you just have IQ without EQ, it’s just a waste of IQ.”
Researchers believe there’s something to Nadella’s philosophy. A little candor can go a long way, not just in helping to ease a company through a transition like returning to the office or building workplace connections in a world of agentic AI, but also in gaining the trust of investors. A working study from the University of Maryland Robert H. Smith School of Business earlier this year found CEOs who show vulnerability to investors are more likely to gain their trust. That vulnerability can even soften the blow of poor earnings.
