Too Proud To Fail: The Impact of Managerial Narcissism on Bankruptcy Initiation

Rachid Achbah, Ivana Vitanova () and Marc Fréchet
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Rachid Achbah: Université Jean Monnet (France, Saint-Etienne) - UJM
Ivana Vitanova: EM - EMLyon Business School
Marc Fréchet: Comue de Toulouse - Communauté d'universités et établissements de Toulouse

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Abstract: This paper examines how managerial narcissism influences firms' decisions to initiate court-supervised bankruptcy proceedings. Building on upper echelons theory and research on CEO narcissism, we argue that the public exposure associated with bankruptcy threatens narcissistic CEOs' self-esteem and need for recognition, leading them to postpone or avoid filing even when doing so is financially optimal. Using two complementary empirical settings involving financially distressed French SMEs, we study (i) CEOs' willingness to file for bankruptcy during episodes of financial distress and (ii) the timing of bankruptcy initiation among firms that ultimately file. Across both samples, higher CEO narcissism is associated with significantly lower propensity and longer delays in initiating bankruptcy proceedings, and this effect is amplified by CEO power. Results are robust to alternative measures of narcissism and to controls for selection effects arising from narcissism's potential role in generating financial distress. Our findings highlight the role of managerial personality in strategic decision-making under financial distress and improve scholarly understanding of bankruptcy initiation.

Keywords: CEO narcissism; CEO power; Bankruptcy proceedings; Financial distress (search for similar items in EconPapers)
Date: 2026-07-01
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Published in Entrepreneurial Finance (ENTFIN) Association Conference 10th, Jul 2026, Marseille, France

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05704519

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