Abstract
This research investigates the relationship between chief executive officer (CEO) narcissism and asymmetric cost behavior. Based on the expectation that CEOs’ narcissism leads to myopic management, I replicate the existence of cost stickiness in a large sample of U.S. public firms and find that narcissistic CEOs exhibit a lower degree of cost stickiness. Additionally, I find that the negative effect of CEO narcissism on cost stickiness is boosted under poor past performance and when firm uncertainty is high. Several robustness tests, including alternative measurements of costs and narcissism, confirm the validity of the results. The findings of this study contribute to the current discussion about the role of narcissistic personalities of CEOs and the behavioral aspects of corporate decisions.
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More From: The North American Journal of Economics and Finance
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