Narcissism Is a Bad Sign: CEO Signature Size and Firm Performance

• In Event: Eclectic Topics

Abstract

Using the size of the CEO signature on annual SEC filings to measure CEO narcissism, we find that narcissism is negatively associated with return on assets, especially for firms in more uncertain operating environments. Narcissistic CEOs also appear to overinvest in capital expenditures and acquisitions while paying lower dividends to shareholders, with the relationship being strongest when firms have greater financial slack. Despite this negative performance relationship, more narcissistic CEOs enjoy higher cash and stock compensation and there is only weak evidence that stock price impounds narcissism as a negative signal. Finally, we find that narcissism is weakly associated with expectations management, but not accruals earnings management.

Authors

• Nicholas Andrew Seybert, University of Maryland, College Park

• Sean Wang, The University of North Carolina at Chapel Hill

• Charles Ham, University of Maryland, College Park