TY  - JOUR
AB  - Purpose The purpose of this paper is to investigate the association between CEO narcissism and corporate risk taking.Design/methodology/approach The authors provide a novel and unobtrusive measure of CEO narcissism based on LinkedIn profiling. The authors investigate the relationship between CEO narcissism and corporate risk taking (stock return volatility) for a sample of 475 US manufacturing firms in the period 2010-2014.Findings The authors find an inverse U-shape relationship between CEO narcissism and stock return volatility. The inverse U-shape relationship (the “humpback”) is caused by the paradoxical nature of the narcissistic personality in which the self-esteem is high but at the same time fragile with a combination of self-admiration and a constant need of having this positive self-view confirmed. The results are robust to alternative specifications of CEO narcissism and corporate risk taking. The results are economically meaningful. Thus, a moderate degree of CEO narcissism – as compared to a very low or a very high level of CEO narcissism – is associated with an increase in corporate risk taking of approximately 12 percent.Originality/value Previous literature provides multiple analyses on the association between managerial overconfidence and corporate decisions. As opposed to overconfidence, narcissism is a personality trait having both cognitive and behavioral dimensions. This paper provides a novel contribution to the growing literature on the association between managerial biases/traits and corporate decision-making.
VL  - 10
IS  - 3
SN  - 1940-5979
DO  - 10.1108/RBF-07-2017-0070
UR  - https://doi.org/10.1108/RBF-07-2017-0070
AU  - Aabo Tom
AU  - Eriksen Nicklas Bang
PY  - 2018
Y1  - 2018/01/01
TI  - Corporate risk and the humpback of CEO narcissism
T2  - Review of Behavioral Finance
PB  - Emerald Publishing Limited
SP  - 252
EP  - 273
Y2  - 2024/04/24
ER  -