CEO Narcissism, Human Capital, and Firm Value

72 Pages Posted: 29 Jul 2018 Last revised: 23 Aug 2018

See all articles by Shane A. Johnson

Shane A. Johnson

Texas A&M University - Department of Finance

Adam C. Kolasinski

Texas A&M University - Department of Finance

James Nordlund

Louisiana State University, Baton Rouge - Department of Finance

Date Written: August 21, 2018

Abstract

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

Suggested Citation

Johnson, Shane A. and Kolasinski, Adam C. and Nordlund, James, CEO Narcissism, Human Capital, and Firm Value (August 21, 2018). Available at SSRN: https://ssrn.com/abstract=3209882 or http://dx.doi.org/10.2139/ssrn.3209882

Shane A. Johnson (Contact Author)

Texas A&M University - Department of Finance ( email )

Mays School of Business
College Station, TX 77843-4218
United States
979-862-3318 (Phone)

Adam C. Kolasinski

Texas A&M University - Department of Finance ( email )

360 Wehner
College Station, TX 77843-4218
United States

James Nordlund

Louisiana State University, Baton Rouge - Department of Finance ( email )

2163 CEBA
Baton Rouge, LA 70803
United States

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