I'm reminded of this with the downfall of Jon Corzine, whose universe included being a great friend to the president of the United States and former head of Goldman Sachs. Having tasted success in the private and public worlds, he has certainly been a master of his universes.
But masters have to be humble or at some point they will be humbled. Of course, to be successful in this ultra competitive world, one must take chances. Some have argued that even crossing a street is risky, but there is risk and there is risk. There are compelling results in a recent study on the persistent relation between genetic personality characteristics of CEOs and corporate policies adopted by their businesses.
Finance professors Matthew Cain of Notre Dame and Stephen McKeon from the University of Oregon used FAA records to compare the actions 179 CEOs with small plane pilot licenses against 2,900 non-pilots. The pilots are the kind of thrill-seekers that one would assume could potentially run a company into the ground. The research revealed several trends including:
More mergers and acquisitions
Greater stock volatility
Higher firm leverage
The work of Cain and McKeon follow up on the Sensation Seeking Scale developed by Marvin Zimmerman at University of Delaware in the 1970s that determined such behavior could be divided into four traits:
> Thrill and adventure-seeking
> Boredom susceptibility
It has been made clear there is a difference between sensation-seeking and high risk-taking which is probably where Jon Corzine fits better. Knowing this, should the board of MF Global have taken past professional and business behavior into account? Let's not forget during his stint as governor of New Jersey, Corzine was in a near-deadly auto accident where he wasn't wearing his seatbelt. In addition, he entered into a romantic relationship with a union chief and even lent her and members of her family money.
(It's not only risky for a governor to be involved with a potential union representative looking for concessions, but the relationship began while Corzine was married). Now stories are coming out that portray Corzine's role at Goldman Sachs as a sloppy, high risk adventure.
One review of the study points out the irony that sensation seekers often lack for outlets to provide stimulations, yet CEOs are able to stimulate and address these needs through creativity and cognitive abilities ... and it often helps the company and its shareholders. Stephen McKeon of University of Oregon will be my special guest on Fox Business Network at 2:00 pm tomorrow.
That late rally probably got help from the latest reading on consumer credit, which leaped to a gain of $7.4 billion after a major tumble of 9.5 billion. Consumer credit is the lifeblood of the economy and critical to any hopes of a sustained economic rebound. Non-revolving debt climbed to $1.662 trillion from $1.654 trillion but revolving decreased to $789.6 billion from $790.2 billion.