Abstract
This study draws on prospect theory and social comparison theory to explore how a peer CEO winning a prestigious CEO award and firm performance relative to aspirations influence competitor CEOs’ risk-taking behavior. We find that when a peer CEO wins a prestigious CEO award, competitor CEOs increase their R&D intensity in the post-award period. Moreover, the proclivity becomes stronger when their firm performance relative to aspirations is both good and poor. We also find that managerial discretion strengthens the moderating effects of an award-winning peer on the relationship between firm performance relative to aspirations and R&D intensity. These findings contribute to the literature by suggesting how social judgment of peers influences competitor CEOs’ risky strategic actions.
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