Are Narcissistic CEOs All That Bad?

10 Pages Posted: 11 Oct 2021

See all articles by David F. Larcker

David F. Larcker

Stanford University - Graduate School of Business; European Corporate Governance Institute (ECGI); Stanford University - Arthur & Toni Rembe Rock Center for Corporate Governance

Charles A. O'Reilly

Stanford University - Graduate School of Business

Brian Tayan

Stanford University - Graduate School of Business

Anastasia A. Zakolyukina

University of Chicago - Booth School of Business

Date Written: October 7, 2021

Abstract

The role that a CEO’s personality plays in corporate outcomes is a topic of considerable interest, particularly the relation between narcissistic CEOs and performance. Common perception is that CEO narcissism is highly prevalent, and considerable research suggests that narcissism is associated with worse outcomes. The majority of studies, however, are based on “unobtrusive” methods that do not directly measure the CEO’s personality through a validated questionnaire but instead on indirect evidence thought to be indicative of narcissism.

In this Closer Look, we test some basic assumptions about the relation between narcissism and corporate outcomes using a sample of CEOs whose personality is formally assessed by long-time directors who know and have worked closely with that CEO. While most of the research into narcissism and outcomes is negative, we find unexpected associations.

We ask:
• Would the results of existing literature be replicated if CEOs were subject to a valid personality evaluation?
• What contribution does a CEO’s personality have to outcomes, and how does it manifest itself through strategy, risk, and culture?
• How much discussion does the board have about the personality of their CEO? What actions do they take when they identify personal tendencies that might be of concern?
• Are narcissists better at corporate “window dressing” than their less narcissistic peers?

Keywords: Corporate governance, CEO personality, CEO narcissism, Big Five personality, Five Factor Model, Narcissistic Personality Inventory, NPI, ESG, governance quality, compensation, pay equity, board of directors, survey, corporate governance research

Suggested Citation

Larcker, David F. and O'Reilly, Charles A. and Tayan, Brian and Zakolyukina, Anastasia A., Are Narcissistic CEOs All That Bad? (October 7, 2021). Rock Center for Corporate Governance at Stanford University Working Paper Forthcoming, Available at SSRN: https://ssrn.com/abstract=3937526

David F. Larcker (Contact Author)

Stanford University - Graduate School of Business ( email )

Graduate School of Business
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European Corporate Governance Institute (ECGI) ( email )

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Stanford University - Arthur & Toni Rembe Rock Center for Corporate Governance ( email )

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Charles A. O'Reilly

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Brian Tayan

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States

Anastasia A. Zakolyukina

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773.834.4838 (Phone)
773.926.0941 (Fax)

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