Narcissistic Chief Executive Officers and Their Effects on R&D Investment and Firm Performance: The Moderating Role of Managerial Discretion.

The impact of the chief executive officer (CEO) narcissism on a firm's performance has gained attention from the academic community. However, the extant literature has largely ignored the mediating mechanism of research and development (R&D) investment and the moderating roles of managerial discretion. Additionally, the measurement of CEO narcissism is rarely disclosed in the public database. Compiling a CEO narcissism index from a video survey, we systematically explore the effect of CEO narcissism on firm performance, the mediating role of R&D investment, and the moderating role of managerial discretion. Based on the upper echelons theory, using a sample of 183 Chinese A-share listed manufacturing firms from 2011 to 2019, we found that CEO narcissism positively and significantly impacts R&D investment and firm performance, and then R&D investment mediated the relationships between CEO narcissism and firm performance. In addition, we found that managerial discretion could affect the relationship between CEO narcissism and R&D investment. Specifically, CEO duality and CEO ownership will strengthen the positive influence of a CEO's narcissism in corporate R&D investment. Our results suggest that CEO narcissism appears to be a stimulus to corporate R&D investment; thus, in recruiting top executives, their psychological traits, especially narcissism, should be given special consideration.