Wednesday, June 18, 2014

Academic literature on CEO narcissism

This link on the TaxProf blog to a newly posted article called "The Effect of CEO Narcissism on Corporate Tax Policies" alerted me to the fact that there apparently is a broader literature, previously unknown to me, associating narcissistic personality traits of CEOs with the companies' playing more aggressive tax and accounting games, building larger empires through acquisitions, taking risks that lead to volatile economic outcomes, etcetera.  See, for example, this article and this one.

As it's accepted in this literature that the best measure of CEO narcissism - getting CEOs to fill out psychological surveys, presumably in a spirit of honest self-disclosure - is not realistically available, the papers use what (drawing on preexisting psychology literature) they call "unobtrusive indicators" of this personality profile.  These may include, for example, "the prominence of the CEO’s photograph in the company’s annual report; the CEO’s prominence in the company’s press releases; the length of the CEO’s Who’s Who entry; the CEO’s use of first person singular pronouns in interviews; the CEO’s cash compensation divided by that of the second-highest paid executive in the firm; and the CEO’s non-cash compensation divided by that of the second- highest paid executive in the firm." [From Chatterjee and Hambrick, which is the second of the three articles linked above.]

Certainly an interesting literature that I plan to look at some more when I have the chance.

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