An Attention-Based Approach to How Narcissistic CEOs Influence the Board to Take More Risk

Abstract

The consequences of CEO narcissism have become a popular topic in several management streams of late. Although it has been suggested that narcissistic CEOs are inclined to engage in greater corporate risk-taking, scholars have not considered how CEOs manage to enact these intentions in light of a critical mediating factor: CEOs generally must gain approval for such endeavors from the board of directors. Using the attention-based view, we theorize that narcissistic CEOs shape the board’s attention to and opinion of firm risk-taking by exercising their ability to manipulate the inclusion, framing, and discussion of risk-taking during board meetings. Utilizing a unique data set encompassing 88 public firms and 197 CEOs over 20 years, we tested our hypotheses by using corporate board minutes to observe how narcissistic CEOs influence boardroom discussion of risk-taking. Our results indicate that the tendency of narcissistic CEOs to increase firm risk-taking depends upon their ability to control the dialogue of board meetings. Moreover, we find that narcissistic CEOs influence the board of directors not so much by controlling the amount of attention devoted to risk-taking, but rather by shaping the type of attention (i.e., the positivity of the tone) given to risk-taking.