Review of Accounting Studies

, Volume 23, Issue 1, pp 234–264 | Cite as

Narcissism is a bad sign: CEO signature size, investment, and performance

  • Charles Ham
  • Nicholas SeybertEmail author
  • Sean Wang


Using the size of CEO signatures in SEC filings to measure individual narcissism, we find that CEO narcissism is associated with several negative firm outcomes. We first validate signature size as a measure of narcissism but not overconfidence using two laboratory studies, and also find that our measure is correlated with employee perceptions of CEO narcissism used in prior research. We then use CEO signatures to study the relation between CEO narcissism and the firm’s investment policies and performance. CEO narcissism is associated with overinvestment, particularly in R&D and M&A expenditures (but not in capital expenditures). Firms led by narcissistic CEOs experience lower financial productivity in the form of profitability and operating cash flows. Despite this negative performance, narcissistic CEOs enjoy higher absolute and relative compensation. Our results are robust to several alternative specifications, including controlling for a popular options-based overconfidence measure used in prior research.


CEO narcissism Signature size Investment Performance Compensation 

JEL classification

G30 G40 M10 M40 



We thank Patricia Dechow (the editor), two anonymous reviewers, Jennifer Conrad, David Hirshleifer, Michael Kimbrough, Andrew Knight, Mark Lang, Christian Lundblad, Justin Leiby, Merih Sevilir, Geoff Tate, Devin Williams, Paul Zarowin, Emanuel Zur, Yue Zheng, Richie Zweigenhaft, and seminar participants at the FARS 2013 midyear meeting, AAA 2014 annual meeting, University of Baltimore, Emory University, University of Florida, and University of Maryland for helpful comments. We thank Jin Kyung Choi, Jeff Ouyang, Chase Potter, and Kai Wang for research assistance.


  1. Ahern, K. R., & Sosyura, D. (2014). Who writes the news? Corporate press releases during merger negotiations. The Journal of Finance, 69(1), 241–291.CrossRefGoogle Scholar
  2. Aktas, N., de Bodt, E., Bollaert, H., & Roll, R. (2016). CEO narcissism and the takeover process: From private initiation to deal completion. Journal of Financial and Quantitative Analysis, 51(1), 113–137.CrossRefGoogle Scholar
  3. Ames, D., Rose, P., & Anderson, C. (2006). The NPI-16 as a short measure of narcissism. Journal of Research in Personality, 40, 440–450.CrossRefGoogle Scholar
  4. Baber, W. R., Fairfield, P. M., & Haggard, J. A. (1991). The effect of concern about reported income on discretionary spending decisions: The case of research and development. The Accounting Review, 66(4), 818–829.Google Scholar
  5. Bamber, L., Jiang, J., & Wang, I. (2010). What’s my style? The influence of top managers on voluntary corporate financial disclosure. The Accounting Review, 85(4), 1131–1162.CrossRefGoogle Scholar
  6. Bebchuk, L., Cohen, A., & Ferrell, A. (2009). What matters in corporate governance? Review of Financial Studies, 22(2), 783–827.CrossRefGoogle Scholar
  7. Bebchuk, L., Cremers, K. J., & Peyer, U. (2011). The CEO pay slice. Journal of Financial Economics, 102(1), 199–221.CrossRefGoogle Scholar
  8. Ben-David, I., Graham, J. R., & Harvey, C. R. (2013). Managerial miscalibration. The Quarterly Journal of Economics, 128(4), 1547–1584.CrossRefGoogle Scholar
  9. Bertrand, M., & Schoar, A. (2003). Managing with style: The effect of managers on firm policies. The Quarterly Journal of Economics, 118(4), 1169–1208.CrossRefGoogle Scholar
  10. Biddle, G., Hilary, G., & Verdi, R. (2009). How does financial reporting quality relate to investment efficiency? Journal of Accounting and Economics, 48(2–3), 112–131.CrossRefGoogle Scholar
  11. Blanchard, O., Lopez-de-Silanez, F., & Shleifer, A. (1994). What do firms do with cash windfalls? Journal of Financial Economics, 36, 337–360.CrossRefGoogle Scholar
  12. Bushman, B. J., & Baumeister, R. F. (1998). Threatened egotism, narcissism, self-esteem, and direct and displaced aggression: Does self-love or self-hate lead to violence? Journal of Personality and Social Psychology, 75(1), 219–229.CrossRefGoogle Scholar
  13. Campbell, W., Goodie, A., & Foster, J. (2004). Narcissism, confidence, and risk attitude. Journal of Behavioral Decision Making, 17, 297–311.CrossRefGoogle Scholar
  14. Carey, A. L., Brucks, M., Küfner, A., Holtzman, N., Deters, F., Back, M., Donnellan, M., Pennebaker, J., & Mehl, M. (2015). Narcissism and the use of personal pronouns revisited. Journal of Personality and Social Psychology, 109(3), e1–e15.CrossRefGoogle Scholar
  15. Chatterjee, A., & Hambrick, D. C. (2007). It’s all about me: Narcissistic Chief Executive Officers and their effects on company strategy and performance. Administrative Science Quarterly, 52, 351–386.CrossRefGoogle Scholar
  16. Chen, F., Hope, O. K., Li, Q., & Wang, X. (2011). Financial reporting quality and investment efficiency of private firms in emerging markets. The Accounting Review, 86(4), 1255–1288.CrossRefGoogle Scholar
  17. Cheng, M., Dhaliwal, D., & Zhang, Y. (2013). Does investment efficiency improve after the disclosure of material weaknesses in internal control over financial reporting? Journal of Accounting and Economics, 56(1), 1–18.CrossRefGoogle Scholar
  18. Core, J., Guay, W., & Larcker, D. (2008). The power of the pen and executive compensation. Journal of Financial Economics, 88(1), 1–25.CrossRefGoogle Scholar
  19. Davis, A. K., Ge, W., Matsumoto, D., & Zhang, J. (2015). The effect of manager-specific optimism on the tone of earnings conference calls. Review of Accounting Studies, 20(2), 639–673.CrossRefGoogle Scholar
  20. Dyreng, S. D., Hanlon, M., & Maydew, E. (2010). The effects of executives on corporate tax avoidance. The Accounting Review, 85(4), 1163–1189.CrossRefGoogle Scholar
  21. Fama, E., & French, K. (1997). Industry costs of equity. Journal of Financial Economics, 43, 153–193.CrossRefGoogle Scholar
  22. Foster, J. D., Campbell, W. K., & Twenge, J. M. (2003). Individual differences in narcissism: Inflated self-views across the life span and around the world. Journal of Research in Personality, 37, 469–486.CrossRefGoogle Scholar
  23. Ge, W., Matsumoto, D., & Zhang, J. (2011). Do CFOs have style? An empirical investigation of the effect of individual CFOs on accounting practices. Contemporary Accounting Research, 28(4), 1141–1179.CrossRefGoogle Scholar
  24. Goncalo, J., Flynn, F., & Kim, S. (2010). Are two narcissists better than one? The link between narcissism, perceive creativity, and creative performance. Personality and Social Psychology Bulletin, 36(11), 1484–1495.CrossRefGoogle Scholar
  25. Goodman, T., Neamtiu, M., Shroff, N., & White, H. (2014). Management forecast quality and capital investment decisions. The Accounting Review, 89(1), 331–365.CrossRefGoogle Scholar
  26. Ham, C., Lang, M., Seybert, N., & Wang, S. (2017). CFO narcissism and financial reporting quality. Journal of Accounting Research.
  27. Hambrick, D. C. (2007). Upper echelons theory: An update. Academy of Management Review, 32(2), 334–343.CrossRefGoogle Scholar
  28. Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9(2), 193–206.Google Scholar
  29. Hirshleifer, D., Low, A., & Teoh, S. H. (2012). Are overconfident CEOs better innovators? Journal of Finance, 67(4), 1457–1498.CrossRefGoogle Scholar
  30. Hribar, P., & Yang, H. (2016). CEO overconfidence and management forecasting. Contemporary Accounting Research, 33(1), 204–227.CrossRefGoogle Scholar
  31. Jensen, M. (1986). Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review, 76, 323–329.Google Scholar
  32. Jia, Y., van Lent, L., & Zeng, Y. (2014). Masculinity, testosterone, and financial misreporting. Journal of Accounting Research, 52(5), 1195–1246.CrossRefGoogle Scholar
  33. John, O., & Robins, R. (1994). Accuracy and bias in self-perception: Individual differences in self-enhancement and the role of narcissism. Journal of Personality and Social Psychology, 66, 206–219.CrossRefGoogle Scholar
  34. Jorgenson, D. O. (1977). Signature size and dominance: A brief note. Journal of Psychology, 97, 269–270.CrossRefGoogle Scholar
  35. Koch, I., & Biemann, T. (2014). Signs of narcissism of CEOs: Validating a widely used measure. Business Policy & Strategy. Academy of Management Proceedings, August 1–5, 2014, Philadelphia, PA.
  36. Kothari, S. P., Laguerre, T. E., & Leone, A. J. (2002). Capitalization versus expensing: Evidence on the uncertainty of future earnings from capital expenditures versus R&D outlays. Review of Accounting Studies, 7(4), 355–382.CrossRefGoogle Scholar
  37. Lakey, C. E., Rose, P., Campbell, W. K., & Goodie, A. S. (2008). Probing the link between narcissism and gambling: The mediating role of judgment and decision making biases. Journal of Behavioral Decision Making, 21(2), 113–137.CrossRefGoogle Scholar
  38. Lefevre, C. E., Lewis, G. J., Perrett, D. I., & Penke, L. (2013). Telling facial metrics: Facial width is associated with testosterone levels in men. Evolution and Human Behavior, 34(4), 273–279.CrossRefGoogle Scholar
  39. Libby, R., & Rennekamp, K. (2012). Self-serving attribution bias, overconfidence, and the issuance of management forecasts. Journal of Accounting Research, 50(1), 197–231.CrossRefGoogle Scholar
  40. Malmendier, U., & Tate, G. (2005). CEO overconfidence and corporate investment. Journal of Finance, 60(6), 2661–2700.CrossRefGoogle Scholar
  41. McNichols, M. F., & Stubben, S. R. (2008). Does earnings management affect firms’ investment decisions? The Accounting Review, 83(6), 1571–1603.CrossRefGoogle Scholar
  42. Moore, D. A., & Dev, A. S. (2017). Individual differences in overconfidence. In V. Zeigler-Hill & T. Shackelford (Eds.), Encyclopedia of Personality and Individual Differences. New York: Springer.Google Scholar
  43. Morf, C., & Rhodewalt, F. (1993). Narcissism and self-evaluation maintenance: Explorations in object relations. Personality and Social Psychology Bulletin, 19, 668–676.CrossRefGoogle Scholar
  44. Myers, S. (1977). Determinants of corporate borrowing. Journal of Financial Economics, 5, 147–175.CrossRefGoogle Scholar
  45. Nevicka, B., Ten Velden, F., De Hoogh, A., & Van Vianen, A. (2011). Reality at odds with perceptions: Narcissistic leaders and group performance. Psychological Science, 22(10), 1259–1264.CrossRefGoogle Scholar
  46. Nuttin, J. M. (1987). Affective consequences of mere ownership: The name-letter effect in twelve European languages. European Journal of Social Psychology, 15, 381–402.CrossRefGoogle Scholar
  47. O’Reilly, C. A., Doerr, B., Caldwell, D. F., & Chatman, J. A. (2014). Narcissistic CEOs and executive compensation. The Leadership Quarterly, 25, 218–231.CrossRefGoogle Scholar
  48. Olsen, K. J., & Stekelberg, J. (2015). CEO narcissism and corporate tax sheltering. The Journal of the American Taxation Association, 38(1), 1–22.CrossRefGoogle Scholar
  49. Olsen, K. J., Dworkis, K. K., & Young, S. M. (2014). CEO narcissism and accounting: A picture of profits. Journal of Management Accounting Research, 26(2), 243–267.CrossRefGoogle Scholar
  50. Ong, C. W., Roberts, R., Arthur, C. A., Woodman, T., & Akehurst, S. (2016). The leader ship is sinking: A temporal investigation of narcissistic leadership. Journal of Personality, 84(2), 237–247.CrossRefGoogle Scholar
  51. Opler, T., Pinkowitz, L., Stulz, R., & Williamson, R. (1999). The determinants and implications of corporate cash holdings. Journal of Financial Economics, 52, 3–46.CrossRefGoogle Scholar
  52. Pelham, B., Carvallo, M., & Jones, J. T. (2005). Implicit egotism. Current Directions in Psychological Science, 14, 106–110.CrossRefGoogle Scholar
  53. Raskin, R., & Howard, T. (1988). A principal-components analysis of the narcissistic personality inventory and further evidence of its construct validity. Journal of Personality and Social Psychology, 54(5), 890–902.CrossRefGoogle Scholar
  54. Resick, C. J., Whitman, D. D., Weingarden, S. M., & Hiller, N. J. (2009). The bright-side and the dark-side of CEO personality: Examining core evaluations, narcissism, transformational leadership, and strategic influence. Journal of Applied Psychology, 94, 1365–1381.CrossRefGoogle Scholar
  55. Rhodewalt, F., & Morf, C. (1995). Self and interpersonal correlates of the narcissistic personality inventory: A review and new findings. Journal of Research in Personality, 29(1), 1–23.CrossRefGoogle Scholar
  56. Richardson, S. (2006). Over-investment of free cash flow. Review of Accounting Studies, 11, 159–189.CrossRefGoogle Scholar
  57. Rudman, L. A., Dohn, M. C., & Fairchild, K. (2007). Implicit self-esteem compensation: Automatic threat defense. Journal of Personality and Social Psychology, 93(5), 798–813.CrossRefGoogle Scholar
  58. Schrand, C., & Zechman, S. (2012). Executive overconfidence and the slippery slope to financial misreporting. Journal of Accounting and Economics, 53, 311–329.CrossRefGoogle Scholar
  59. So, E. C. (2013). A new approach to predicting analyst forecast errors: Do investors overweight analyst forecasts? Journal of Financial Economics, 108(3), 615–640.CrossRefGoogle Scholar
  60. Staw, B., & Epstein, L. (2000). What bandwagons bring: Effects of popular management techniques on corporate performance, reputation, and CEO pay. Administrative Science Quarterly, 45(3), 523–556.CrossRefGoogle Scholar
  61. Tamborski, M., Brown, R. P., & Chowning, K. (2012). Self-serving bias or simply serving the self? Evidence for a dimensional approach to narcissism. Personality and Individual Differences, 52(8), 942–946.CrossRefGoogle Scholar
  62. Wink, P. (1991). Two faces of narcissism. Journal of Personality and Social Psychology, 61(4), 590–597.CrossRefGoogle Scholar
  63. Yang, H. I. (2012). Capital market consequences of managers’ voluntary disclosure styles. Journal of Accounting and Economics, 53(1), 167–184.CrossRefGoogle Scholar
  64. Zweigenhaft, R. L. (1977). The empirical study of signature size. Social Behavior and Personality, 5, 177–185.CrossRefGoogle Scholar
  65. Zweigenhaft, R. L., & Marlowe, D. (1973). Signature size: Studies in expressive movement. Journal of Consulting and Clinical Psychology, 40(3), 469–473.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2017

Authors and Affiliations

  1. 1.John M. Olin School of BusinessWashington University in St. LouisSt. LouisUSA
  2. 2.Robert H. Smith School of BusinessUniversity of MarylandCollege ParkUSA
  3. 3.Jesse H. Jones Graduate School of BusinessRice UniversityHoustonUSA

Personalised recommendations