CEO Narcissism: Measurement and Impact Defended on Thursday, 23 June 2011

This research describes the objective measurement of CEO narcissism and its impact on organizational outcomes. Narcissism forms an essential element for effective leadership and is as such an important personal characteristic for CEOs.
CEO narcissism can be measured by investigating five determinants of CEO behavior, comprising media exposure, compensation, power, growth and perquisites. The CEO narcissism score is based on these five determinants by a massive data collection of fifteen objective variables for 953 S&P500 CEOs. The composed CEO narcissism score reflects the psychologically validated factor solution of narcissism. CEOs who have been identified as narcissists by leading psychologists have a top score in this research.
The results of the first empirical impact study show an intricate relationship between CEO narcissism and financial accounting performance measures which can be visualized by a concave parabola. This relationship confirms the view that narcissism is an essential element for effective CEO leadership, but is however not without its pitfalls for either too low or too high levels of narcissism.
The results of the second empirical impact study indicate a negative relationship between CEO narcissism and countervailing power of the board. High narcissistic CEOs do not tolerate contradiction and surround themselves with followers.
The third impact study examines the relationship between CEO narcissism and fraud propensity as alleged in AAERs by the SEC. The results show that high narcissistic CEOs are more inclined to commit managerial fraud to keep up appearances and retain their status.
The empirical results theoretically contribute to the psychological perspective of narcissism as a double edged sword and provide an indication to expand the upper echelon theory with the CEOs narcissistic personality.
The practical contribution of this research enables stakeholders to monitor CEO narcissism by applying objective measures and trying to retain productive CEO narcissism levels.

Keywords

corporate governance, upper echelon theory, CEO, narcissism, financial performance, countervailing power, fraud