The Effect of Narcissism and CEO Power on the Investment Efficiency and Consistent Earnings Growth

Abstract

Maximizing the value of the company requires making the right investment decisions and any striving for value creation and optimal use of investment opportunities is influenced by the behavioral aspects and individual characteristics of the CEO. The present study investigates the effect of narcissism and CEO power on firm's investment efficiency and consistent earnings growth. Accordingly, 110 companies listed in Tehran Stock Exchange were selected by random sampling method and multivariate regression method was used for the period 2012-2019. This research is applied in terms of purpose and using the post-event approach. The results showed that narcissism had a significant positive and negative effect on firm's investment efficiency and consistent earnings growth, with a significance level of 0/006 and 0/111, respectively. Also, CEO power has a significant positive effect on investment efficiency and consistent earnings growth with a significant level of 0/001 and 0/002, respectively. This result reflects the opportunistic behavior of managers in pursuit of personal benefits and increased agency costs, which requires more monitoring of the behavioral characteristics of managers.

Keywords

• ceo narcissism
• ceo power
• investment efficiency
• consistent earnings growth