Article2021

Be careful what you wish for: CEO and analyst firm performance attributions and CEO dismissal

Sun Hyun Park · Sung Hun Chung · Nandini Rajagopalan

54 citations0/0 files storedStrategic Management Journal

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Corporate Finance and Governance Auditing, Earnings Management, Governance Corporate Governance and Financial Management

Abstract

Abstract Research Summary Chief executive officers (CEOs) often make internal attributions of positive firm performance outcomes by highlighting their strategic choices as the cause of favorable performance results. We investigate the dynamic consequences of CEO internal performance attributions along a CEO's tenure. CEO internal attributions create an expectation that favorable firm performance will continue under the CEO's leadership. When firm performance turns negative, however, financial analysts also make internal attributions, pointing to the strategies highlighted by the CEO as the cause of performance downfall. Analysts' internal attributions provide a board with a legitimate account casting doubt on the CEO's leadership efficacy, increasing the likelihood of dismissal. We find strong empirical support for our hypotheses in a panel dataset that tracks CEO and analyst interviews in news media around quarterly earnings announcements. Managerial Summary While prior studies of chief executive officers (CEOs) dismissal have considered different factors leading to CEO dismissal, our study highlights the role played by the CEO's own public performance attributions. Our results show that when CEOs attribute positive performance outcome to their leadership, financial analysts are also more likely to attribute subsequent negative performance outcomes to their leadership, which in turn ultimately leads to CEO dismissal. Given the difficulty of predicting firm performance over an extended period of time, CEOs should be aware that when they take credit for positive performance outcomes they may be setting themselves up for subsequent blame from external constituents seeking explanations for negative performance outcomes. Thus, our results suggest that CEOs may stand to gain from more self‐effacing behaviors.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 54 citations exist upstream.

References

1991Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations 1984Upper Echelons: The Organization as a Reflection of Its Top Managers 1984Upper Echelons: The Organization as a Reflection of Its Top Managers 1998Confirmation Bias: A Ubiquitous Phenomenon in Many Guises 2005The economic implications of corporate financial reporting 1977The Intuitive Psychologist And His Shortcomings: Distortions in the Attribution Process 2008Who makes acquisitions? CEO overconfidence and the market's reaction☆1983The Third-Person Effect in Communication

Cited by

2022Problem Solving or Responsibility Avoidance? The Role of CEO Internal Attribution Tendency in Shaping Corporate Downsizing in Response to Performance Shortfalls 2022CSR and CEO pay: Does CEO reputation matter?2023Fifty years of research on leader communication: What we know and where we are going 2023Behavioral agency and the efficacy of analysts as external monitors: Examining the moderating role of CEO personality 2023Competitive Actions under Analyst Pressure: The Role of CEO Time Horizons

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.