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

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.

► I study the impact of self attribution bias (SAB) of the CEO using transcripts of CNBC interviews. ► Inverse U-shape between acquisition announcement returns and self attribution is found. ► CEOs with SAB are fired more sensitively to performance after SOX. ► CEOs blaming industry for bad performance tend to do diversifying mergers in the future. ► The result is not explained away by narcissism or the governance role of the media.