CFO Narcissism and the Power of Persuasion Over Analysts: A Mixed-Methods Approach

Abstract

We study the role of CFO narcissism in the intent and ability to positively influence sell-side analysts’ perceptions of the firm. Consistent with narcissists casting favorable impressions on others, we find CFO narcissism is associated with overly optimistic analyst valuations. Analyses of conference call transcripts reveal that narcissistic CFOs exhibit greater analyst engagement—especially with bearish analysts—and use more optimistic language, argumentative prose, and corporate euphemisms, suggesting attempts at persuasion in public settings. We also provide evidence that these public persuasion tactics contribute to optimistic analyst valuations. We then use a laboratory study to simulate a private communication channel and find that narcissists are more likely to use persuasion methods that involve directly pressuring analysts (e.g., threatening to remove private lines of communication with management) to induce higher valuations. Collectively, we provide evidence that narcissistic CFOs exercise persuasion tactics to favorably influence analysts’ perceptions of firm value. 

Keywords: Executive Narcissism, Persuasion, Sell-Side Analysts

JEL Classification: G24, G30, G41