Chairman Narcissism and Social Responsibility Choices: The Moderating Role of Analyst Coverage

Abstract

Chairman narcissism has received extensive attention in social psychology and organizational behavior, but the relationship between chairman narcissism and social responsibility has not yet received much attention. The purpose of this study is to investigate the effect of chairman narcissism on various dimensions of CSR and the moderating roles of analyst coverages. Based on upper echelons theory and stakeholder theory, we distinguished internal corporate social responsibility (internal CSR) and external corporate social responsibility (external CSR) according to whether there was a formal contractual relationship. This study used a narcissism index of chairmen of Chinese listed companies to examine the relationship between chairman narcissism and internal CSR, external CSR, and the data were analyzed using Stata16.0. The results showed that there was a positive correlation between chairman narcissism and external CSR, and there was a negative correlation between chairman narcissism and internal CSR. That is, the higher the Chairman’s narcissism degree is, the more external CSR and less internal CSR the firm makes. Further research showed that analyst coverage has weakened the impact of chairman narcissism on internal and external CSR. This paper enriches and expands the research on chairman narcissism and CSR and provides new ideas for selecting corporate managers and improving corporate governance.

Influence of Narcissistic CEOs on Corporate Social Responsibility (CSR) Choices: The Moderating Role of the Legal Environment

“…Researchers have previously focused on general CSR activities and examined the antecedents of CSR aggregately, whereas only a few studies have focus on a typology of CSR. 13 , 66 By elaborating how a CEO’s narcissism can affect a firm’s CSR choices (charitable donations and employee welfare), we respond to the call on how managers prioritize and balance aspects of CSR activities. In particular, our research verified that highly narcissistic CEOs tend to increase charitable donations and reduce employee welfare, indicating that narcissistic CEOs may be a crucial force in causing the gap between external and internal CSR investments.…”

“…Recently, however, Gao went further and found that highly narcissistic leaders are motivated primarily by egoism and will satisfy personal needs results at the expense of employees. 13 We can observe that the relationship between CEO narcissism and social responsibility is inconsistent. Such inconsistencies quite likely are due to narcissistic CEOs may hold varying attitudes toward different stakeholders.…”

“…One reason is that narcissistic CEOs may make different behaviors when faced by different stakeholders. 13 Behavioral finance theory argues that irrational personality characteristics of CEO could lead them to irrational choices. Stakeholder theory emphasizes that internal and external stakeholders have different impacts on firm’s behavior.…”

The Effect of CEO Narcissism, Company Size, and Free Cash Flow on Financial Performance through CSR in SOEs on the IDX 2018-2022

“…Indonesia's rapid economic growth has created a dynamic business environment in recent years. The role of State-Owned Enterprises (SOEs) in supporting economic stability and growth is becoming increasingly important (Gao, Gao, Long, & Wang, 2023). The financial performance of SOEs is the focus of attention, considering its impact on sustainability and the contribution of SOEs to national development (Gao et al, 2023).…”

“…The role of State-Owned Enterprises (SOEs) in supporting economic stability and growth is becoming increasingly important (Gao, Gao, Long, & Wang, 2023). The financial performance of SOEs is the focus of attention, considering its impact on sustainability and the contribution of SOEs to national development (Gao et al, 2023). Problems related to the financial performance of state-owned companies in Indonesia have become complex, involving several factors that can affect the company's financial results.…”