The relationship between managers' narcissism and overconfidence on corporate risk-taking

Purpose The primary purpose is to investigate the relationship between narcissism and managers' overconfidence in listed companies' risk-taking. Design/methodology/approach In this study, two criteria of signature and reward are used to measure manager's narcissism; manager's overconfidence, using multiple regression models and finally to measure companies' risk-taking by using companies' monthly returns. Multiple regression is employed to test the model using a sample of 890 firm-year participation on the Tehran Stock Exchange from 2012 to 2017 with panel data and model with fixed effects. Findings The findings indicate that the CEO's narcissism and the board of directors positively and significantly affect corporate risk-taking. Also, managers' overconfidence has a positive and significant relationship with corporate risk-taking. Originality/value The results of this study identified other factors affecting companies' risk-taking. This study also contributed to the development of the literature on narcissism, overconfidence and corporate risk-taking.