The Relative Effects of Grandiose and Vulnerable Narcissism on External Forecasting Behavior

Abstract

ABSTRACT We examine the relationship between grandiose (GN) and vulnerable (VN) narcissism and their relative effects on external forecasting behavior. We also investigate how narcissists respond to a stronger/weaker forecast made by an industry competitor. Our participants are practicing professionals with accounting or corporate finance experience. We find evidence of a nonlinear relationship between GN and VN. At lower levels of GN, the relationship between the two is not statistically significant, but as GN increases they show a strong, positive correlation. High-GN narcissists exhibit relatively aggressive forecasting behavior, even when they are also high-VN, and are not particularly responsive to a strong competitor forecast. In contrast, low-GN/high-VN narcissists are more strategic, issuing more (less) aggressive forecasts when the competitor forecast is stronger (weaker). Our research contributes to the limited accounting research on VN and highlights the importance of considering both GN and VN on manager behavior.