Setting the tone to get their way: An attention‐based approach to how narcissistic CEOs influence the board of directors to take more risk

Research SummaryUpper echelons research has generated insights into the organizational consequences of CEO narcissism. However, fewer studies have empirically attended to the mechanisms through which these consequences occur. Using the attention‐based view, we introduce a process model examining how CEO narcissism is linked to corporate risk‐taking through the board of director discussion tone of risk‐taking during board meetings. We further note that narcissistic CEOs have an increased ability to do so when they are appointed to be board chair. We find strong support for each of our hypotheses by utilizing a unique data set of corporate board meeting transcripts encompassing 88 public firms and 197 CEOs over 20 years. Our results suggest that narcissistic CEOs are adept at controlling the attentional foci of boards of directors to get their way.Managerial SummaryOur study offers an explanation as to how CEO narcissism influences firm risk‐taking behavior. Specifically, we demonstrate that narcissistic CEOs are prone to drive board discussions about risk‐taking to hold a positive tone—especially when they also serve as board chair—thereby enabling them to allocate increased resources toward risk‐taking strategies. Through an extensive analysis of board meeting transcripts spanning two decades across 88 companies, we illustrate how narcissistic CEOs wield substantial influence in molding board conversations to mirror their own pro‐risk inclinations. This insight further considers the importance of understanding CEO behavior in guiding risk management strategies in the future.