As media opportunities continue to expand and bifurcate, the temptations for media slut CEOs grow commensurately. A new and cautionary paper shows one effect, that CEOs who win awards and are featured in the media for their success change their behavior to get more of the media drug, to the point that it leads to poorer performance in future — worse performance than would be suggested by mere mean reversion.
We find that the firms of CEOs who achieve “superstar” status via prestigious nationwide awards from the business press subsequently underperform beyond mere mean reversion, both relative to the overall market and relative to a sample of “hypothetical award winners” with matching firm and CEO characteristics. At the same time, award-winning CEOs extract significantly more compensation from their company following the award, both in absolute amounts and relative to other top executives in their firm. They also spend significantly more time and effort on public and private activities outside their company such as assuming board seats or writing books. The incidence of earnings management increases significantly after winning awards. Our results suggest that media-induced superstar culture leads to behavioral distortions beyond mere mean reversion.