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Do narcissistic CEOs rock the boat?

Review of behavioral finance, 2021-04, Vol.13 (2), p.141-164 [Peer Reviewed Journal]

Emerald Publishing Limited ;Emerald Publishing Limited 2020 ;ISSN: 1940-5979 ;EISSN: 1940-5987 ;DOI: 10.1108/RBF-09-2019-0118

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  • Title:
    Do narcissistic CEOs rock the boat?
  • Author: Aabo, Tom ; Hoejland, Frederik ; Pedersen, Jesper
  • Subjects: Annual reports ; Compensation ; Executives ; Freud, Sigmund (1856-1939) ; Globalization ; Hypotheses ; Narcissism ; Personality disorders ; Psychological aspects ; Psychologists ; R&D ; Research & development ; Volatility
  • Is Part Of: Review of behavioral finance, 2021-04, Vol.13 (2), p.141-164
  • Description: PurposeThe purpose of this paper is to investigate the role of narcissistic supply for the association between CEO narcissism and corporate risk taking.Design/methodology/approachThe authors investigate a sample of 281 non-financial S&P 1500 firms and a corresponding 457 CEOs in the 10-yr period 2006–2015.FindingsThe association between CEO narcissism and corporate risk taking depends on the admiration, attention, and affirmation of own superiority (“narcissistic supply”) that the CEO receives given her/his current position. Thus, a narcissistic CEO with an insufficient narcissistic supply (small firm/small compensation) will crave for more and take more risks (“rock the boat”) while a narcissistic CEO with a sufficient narcissistic supply (large firm/large compensation) will protect the status quo and be reluctant to take new risks. Specifically, the authors find that a change from a slightly narcissistic CEO to a strongly narcissistic CEO, for positions entailing limited (abundant) narcissistic supply, is associated with an increase (a decrease) in corporate risk of 6%–8% (11%–27%).Originality/valuePrevious research indicates a positive association between CEO narcissism and corporate risk taking in specific domains such as M&A and R&D activities. This paper provides a novel contribution to the existing literature by identifying and assessing the important role of narcissistic supply for the association between CEO narcissism and corporate risk taking in general.
  • Publisher: Leeds: Emerald Publishing Limited
  • Language: English
  • Identifier: ISSN: 1940-5979
    EISSN: 1940-5987
    DOI: 10.1108/RBF-09-2019-0118
  • Source: ProQuest Central
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