The Beguiling Behaviour of Narcissistic CEOs : Evidence from Repurchase Announcements

We study whether CEO narcissism affects a firm’s share repurchase announcements and their implementations. Using signature characteristics as a measure of narcissism, we 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. They repurchase less and a small dollar amount when they make an actual repurchase in the announcement year. The higher rate and amount of repurchase announcements are more pronounced in poorly-governed firms with narcissistic CEOs. These results are robust to various specifications including a difference-in-difference specification using CEOs’ exogenous turnover, controlling for other CEO traits and using an alternative measure of narcissism based on pronoun usage in CEO communications. Collectively, the results presented in this study demonstrate that narcissist CEOs play a critical role in the intensity of share repurchase announcements and their executions, particularly for firms with weaker governance structure