Narcissistic CEOs - A Signature for Poor Performance - Ideas for Leaders
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Narcissistic CEOs – A Signature for Poor Performance

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Have you ever worked for a bit of a self-obsessed boss? You weren’t imagining it; corporate narcissism is an actual and not unusual phenomenon. It can even eventually diminish firm performance and is therefore something to look out for. Now, research suggests that the size of a CEO’s signature may give a clue as to how big their ego is. 


Recently, faculty from Kenan-Flagler Business School and Robert H. Smith School of Business looked at the relationship between egotistic (or narcissistic) CEOs and firm performance by measuring ego by the size of signatures on yearly SEC filings. They looked at about 400 CEO signatures from the annual SEC filings from companies in the S&P 500, focusing on narcissism as a basic personality trait rather than a psychological disorder. They defined and associated narcissism with conceit and disregard for others instead of hostility and increased aggression, which is narcissism in its extreme form.

Previous research already suggests that narcissistic CEOs are more likely to make aggressive and unilateral decisions, without considering or incorporating others’ feedback. Here, professors Charles Ham, Nicholas Seybert and Sean Wang set out to examine this further, and found that CEO narcissism is indeed negatively related to a number of factors linked to firm performance; the effect of narcissism is roughly as large as the effect of firm size and firm age. Taken together, this indicates that narcissism has an economically significant impact on firm performance.

They also examined the effect of narcissism on a firm’s investment strategy, finding a positive relationship between this and CEO signature size. This suggests that narcissistic CEOs exhibit higher overall investment. Specifically, they tend to invest more heavily in capital expenditures and acquisitions, while paying out lower dividends (i.e. narcissistic CEOs return less capital to shareholders).

"Despite prior findings showing risk-taking sometimes is good, our results show that risky behaviour from these narcissistic CEOs generates negative, declining performance over the long term, especially in firms that are younger, small, and/ or R&D-intensive," says one of the researchers, Nicholas Seybert.


Understanding these findings is important for executives, as they indicate that narcissistic CEOs over-invest in capital expenditures and acquisitions while paying lower dividends to shareholders. An awareness of this can be used by investors in particular to identify and exercise increased monitoring over such CEOs; fortunately, the wealth of literature in this field seems to indicate that the market already at least partially recognizes the implications of this personality trait.

"Corporate directors should keep their CEO’s narcissism in-check and think twice about pursuing the ego-driven superstar CEO, especially in an era of scrutiny on CEO overcompensation, which peaked in public outrage a few years ago," advises Seybert.



Narcissism is a Bad Sign: CEO Signature Size and Firm Performance, “Ham, Charles,” “Seybert, Nicholas,” “Wang, Sean,” Working Paper (2012)

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Idea conceived

January 1, 2012

Idea posted

Jun 2013
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