This thesis contains three essays investigating the effects of CEO narcissism on corporate decisions. In the first essay, I study whether CEO narcissism affects a firm’s share repurchase announcements and their implementations. I find that US firms with narcissist CEOs are more likely to make repurchase announcements and announce higher repurchase dollar amounts. However, these firms are less likely to follow through. Actual repurchases by these firms are less frequent and they use a smaller amount of cash for share buyback because they have a higher cashflow sensitivity of cash. Narcissist CEOs’ repurchase announcements are less driven by market timing and have a lower announcement effect compared to those by other CEOs. Finally, The higher rate and amount of repurchase announcements are more pronounced in poorly governed firms with narcissistic CEOs.
In the second essay, I examine the relationship between CEO narcissism and the management of firm employees’ defined benefit (DB) pension plans in a sample of US firms. I find that firms with narcissist CEOs adjust their DB plan deficits at a slower rate than other firms. Further, narcissist CEOs display a slower speed of adjustment of the funding deficit towards the fully funded level if they have cash flow as a metric for their compensation. However, I find narcissist-managed firms to increase their adjustment speed more than other CEOs when they can enjoy more tax benefits through the tax deductions that come with pension contributions. I find that delay in DB pension adjustment by narcissist CEOs is more pronounced in poorly governed firms. Taken together, the results suggest that firms run by narcissist CEOs have a tendency to borrow more from employees to fund business operations and personal compensation than other firms.
In the third essay, I examine the effect of CEO narcissism on corporate lobbying activities. I find keen involvement of narcissist-managed firms in corporate lobbying activities compared to other firms. Narcissist CEO lobbying activities increase corporate gains and firm value. Also, narcissist CEOs promote lobbying issues that serve the interest of shareholders. Further findings indicate that political strategies like lobbying by narcissistic CEOs significantly impact the allocation of government contracts. Finally, I find a significant positive relationship between CEO narcissism and environmental-related lobbying.
My results suggest that narcissistic CEOs use environmental lobbying as a channel to generate narcissism supply.