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Self attribution bias of the CEO: Evidence from CEO interviews on CNBC

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  • Kim, Y. Han (Andy)

Abstract

Self attribution bias (SAB, hereafter) is a mechanism that engenders overconfidence by attributing good performance to one’s ability and bad performance to bad luck or the environment (Gervais and Odean, 2001). Using the transcripts of CEO interviews on CNBC, we measure the SAB of the CEO. Consistent with the prediction by Gervais et al. (2011) and Goel and Thakor (2008), we find concave non-linear relation between SAB and the market response to acquisition announcements. We also find that the CEOs with SAB are more likely to be fired and more sensitively to performance, especially under stronger governance regime of Sarbanes Oxley Act (SOX). Our results are robust after controlling for the selection bias to be in the CNBC interview. We consider and rule out alternative explanations, such as journalists’ impact on governance and CEO’s narcissism.

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  • Kim, Y. Han (Andy), 2013. "Self attribution bias of the CEO: Evidence from CEO interviews on CNBC," Journal of Banking & Finance, Elsevier, vol. 37(7), pages 2472-2489.
    • Handle: RePEc:eee:jbfina:v:37:y:2013:i:7:p:2472-2489
    DOI: 10.1016/j.jbankfin.2013.02.008
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    More about this item

    Keywords

    Self-serving attribution bias; Overconfidence; CEO turnover; Investment cash flow sensitivity; CNBC; Media; Corporate governance;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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