CEO Narcissism, Human Capital, and Firm Value
72 Pages Posted: 29 Jul 2018 Last revised: 23 Aug 2018
Date Written: August 21, 2018
Firms with narcissistic CEOs are more likely to experience the turnover of non-CEO executives; this effect is amplified for executives with pay closer to the CEO’s pay. Stock price reactions to narcissism-induced departures are more negative the longer the non-CEO executive’s tenure. If long-tenured non-CEO executives have more valuable human capital, the results imply a relation between CEO narcissism and the loss of valuable human capital. We find parallel results for mass layoffs of non-executive, rank-and-file employees. Our findings imply that CEO narcissism impacts firm value through its effect on the retention of valuable human capital.
Keywords: narcissism, executives, turnover, layoffs, human capital, behavioral finance
JEL Classification: M12, M51, M54, G40
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