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Star CEOs: Influence on Competitor CEOs’ Risk-Taking

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https://ir.library.oregonstate.edu/concern/articles/2514nv32s

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  • This study explores how a star CEO winning a prestigious award and prior firm performance relative to competitive aspirations, defined as the performance of industry peers, influence competitor CEOs’ risk-taking. Using a difference-in-differences methodology, we find that when a star CEO wins a prominent award, competitor CEOs increase their risk-taking. The proclivity becomes stronger when their prior firm performance rises above competitive aspirations. In sum, these findings support our argument that a star CEO winning a prominent award can serve as a striving aspiration, inducing competitor CEOs to perceive a loss and take risks. Furthermore, better firm performance relative to competitive aspirations underscores the salience of striving aspiration, enhancing the proclivity of these competitor CEOs to take risks. Hence, this study contributes to the literature by showing that a critical event at a rival firm can affect a CEO’s perceptions and subsequent risk-taking.
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  • 0025-1747

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