KOREASCHOLAR

Introduction
The attributes of the Chief Executive Officer (CEO) have a significant influence on the actions of the organization and, ultimately, firm performance (Chatterjee & Hambrick, 2007; Kashmiri, Nicol, & Arora, 2017). Recently, there has been growing interest in one particular CEO attribute, i.e., narcissism and how this individual characteristic affects actions taken by the firm and the outcomes achieved. Narcissistic CEOs have been described as “having an inflated self-concept that is enacted through a desire for recognition and a high degree of self-reference when interacting with others (Resick, Whitman, Weingarden, & Hiller, 2009: pg. 1367).” Prior research has found that CEOs with a more narcissistic personality make riskier decisions by changing the company’s strategy more often (Chatterjee & Hambrick, 2007), making acquisitions more frequently and of larger targets (Chatterjee & Hambrick, 2007), adopting discontinuous technologies (Gerstner, König, Enders, & Hambrick, 2013), and expanding international business activities (Oesterle, Elosge, & Elosge, 2016). The results of previous studies show that by pursuing decisions with greater risk and involving the firm in wide-ranging efforts, the actions of narcissistic CEOs lead to fluctuating firm performance (Chatterjee & Hambrick, 2007) and diminishes the positive effect of various firm activities. While these prior studies have provided valuable insight, the strong emphasis on the organizational actions taken as a consequence of the narcissistic CEO has not added to our understanding of the relationship between CEOs who seek personal affirmation, admiration, and attention and important intervening variables for firm performance such as corporate brand reputation. Corporate brand reputation signals the status of an organization and influences the actions of capital markets, investors, consumers, and applicants in the job market (Fombrun & Shanley, 1990). Managers actively work to construct favourable corporate brand reputations through the actions the firm takes and the information selectively released to the media and public. Yet, the literature suggests that narcissistic CEOs spend time focusing on how to enhance their own image rather than on achieving organizational goals (Resick et al., 2009). In this regard, the attention-seeking CEO likely becomes a focal point for the corporate brand. However, no research to date has examined the relationship between the narcissistic CEO’s personality and the effects of corporate brand reputation. This study fills the gap in the literature by investigating how CEO narcissism influences the effectiveness of corporate brand reputation on firm performance.
Theoretical development
The literature on corporate brands noted that corporate brand reputation is a critical intangible asset that affects firm performance (Roberts & Dowling, 2002). Stakeholders use corporate brand reputation as a means to compare and contrast competitors Researchers have noted various advantages for highly reputable firms: customers are willing to pay more for offerings (Roberts & Dowling, 2002) and accept new product innovations (Dowling, 2002); managers accept lower remuneration (Tavassoli, Sorescu, & Chandy, 2014) and receive higher payoff for investments (Benjamin & Podolny, 1999). These types of advantages allow for greater performance. Thus, consistent with prior literature, we argue the following:
Hypothesis 1: Corporate brand reputation has a positive effect on future firm performance.
Research has shown that CEO narcissism diminishes the effect of the firm’s positive actions. Petrenko, Aime, Ridge, and Hill (2016) argue that narcissistic CEOs pursue Corporate Social Responsibility efforts (CSR) as a means to enhance their own image. Yet, the authors found that the narcissistic CEOs actually reduce the positive affect of CSR initiatives. Likewise, Engelen, Neumann, and Schmidt (2016) examined the effect CEO narcissism had on the relationship between entrepreneurial orientation and performance finding that CEO narcissism lessens the positive effect of entrepreneurial orientation. These results are due to the narcissistic CEOs perpetual need for attention and self-affirmation which leads to unconcentrated work initiatives and a lack of attention to the needs of employees. When subordinates’ needs are ignored they develop a sense of powerlessness, incompetence and a lack of desire to present their own ideas. This environment diminishes entrepreneurial engagement (Engelen et al., 2016; Wales, Patel, & Lumpkin, 2013). In line with this view, we believe the attention-seeking narcissistic CEO competes with the development of the corporate brand and will dampen the positive effect of highly reputable brands on firm performance. Thus, we argue the following:
Hypothesis 2: CEO narcissism diminishes the positive effect of corporate brand reputation on firm performance.
Method
We compiled a unique unbalanced panel composed of data from COMPUSTAT, ExecuComp, and Fortune Most Admired Companies listing. Our sample includes 993 firm-year observations consists of 237 CEOs from 144 U.S companies on eight-year period, 2009-2016. Data on CEOs were collected from the ExecuComp databases. Financial performance data were from COMPUSTAT. Firm reputation was obtained from firm’s published score in the Fortune “Most Admired Companies” survey in a given year. The fortune rating is obtained through surveys from executives and directors, and has been widely used in previous research (Love, Lim, & Bednar 2017). Our independent and control variables are measured in the year prior to the one in which the survey ratings are published. CEO narcissism is invariant meaning narcissism is a relatively stable disposition similar to Chatterjee and Hambrick’s (2011) and obtained by averaging data from the second and third years of each CEO’s tenure (t + 1 and t + 2). First year of the CEO’s tenure was not considered because of frequently mentioned anomalies reported at first year. CEO narcissism was measured with the same way as Chatterjee and Hambrick’s (2011). Thus, it combines indicators for (1) the prominence of the CEO’s photograph in the company’s annual report; (2) the CEO’s prominence in the company’s press releases; (3) the CEO’s use of first-person singular pronouns in interviews; (4) the CEO’s cash relative pay where cash compensation divided by that of the second-highest paid executive in the firm; and (5) the CEO’s non-cash relative pay where non-cash compensation divided by that of the second-highest-paid executive in the firm. Dependent variables were measures annually and consider available data after the second-year tenure of CEO (n > 2), yielding a 380 firm-years, 61 CEOs for testing our hypothesis. Firm performance was measured with Tobin’s Q (TQ), calculated by dividing the firm’s market value by firm’s asset replacement costs. We have the CEO, the firm, and the industry level control variables. CEO level control variables are CEO age, CEO tenure, CEO gender, CEO stock ownership as the percentage of company stock owned by the CEO, whether the CEO was also board chairman (duality). Firm-level control variables are firm’s the prior year performance, firm size (natural logarithm of revenues t+n–1), firm age, for each dependent variable, to consider strategy or performance tendencies, we included performance value for the firm in the year prior to the start of the CEO’s tenure (t – 1). Industry control variables are dummies for the industry sector (manufacturing, regulated and services industries), the industry average (for all firms in the sample, always excluding the focal firm) in each year (t + n), for each dependent variable to be able to control for industry tendencies. To control for endogeneity i.e. narcissistic CEOs are drawn to certain situations and/or that some conditions, we followed exactly the same procedure of Chatterjee and Hambrick’s (2011). Thus, we regressed CEO narcissism on firm revenues, age, ROA, and calendar year for the year prior to the CEO’s start, ROA change between first and second years of CEO tenure, measures in t+1, namely power (CEO/chair duality and CEO ownership), CEO age, industry dummies. Using the regression coefficients of the significant variables, we calculated each CEO’s predicted narcissism score and included that value as an endogeneity control in our analyses. We used generalized estimating equations (GEE) (Liang & Zeger, 1986), which derive maximum likelihood estimates and accommodate non-independent observations. Due to multiple observations for almost all firms, there is non-independency in our model. We specified a Gaussian (normal) distribution with an identity link function. The covariance structure of the repeated measurement was autoregressive of order one (AR(1)). We used robust variance estimators in our estimations. We used the xtgee routine in Stata 14.2.
Results and conclusions
The results provide considerable support for hypotheses 1 and 2. Hypothesis 1 predicted that corporate reputation has a positive effect on firm performance (b = .02, p < .01). CEO narcissism is a moderating effect between corporate brand reputation and firm performance. Specifically, CEO narcissism diminishes the positive effect of corporate reputation on firm performance (b = -.04, p < .05). Besides, CEO narcissism have a negative main effect on firm performance (b = -.14, p < .05). Corporate reputation is an intangible asset for firms and positively associated with firm performance according to our results. Little is known so far about the CEO and corporate brand relationship and the role of CEO brands in creating value for the company (Bendisch, Larsen, & Trueman, 2013). We investigated how CEO narcissism influence the relationship between firm’s reputations and firm performance which have not been investigated so far. Since CEOs are the face of the company and it contributes to corporate brand value, narcissistic CEOs might diminish the effect of corporate brand reputation on firm performance with their actions and messages. We find support for our ideas. As a future research, we suggest investigating this issue for different industry sectors and different firm performance measures. Besides, the process of what type of actions of CEOs might diminish brand value should be investigated further. When narcissistic CEOs reduce corporate brand reputation, another potential topic worth to investigate further.

• Adıgüzel, Feray(LUISS Guido Carli University, Italy)
• Turner Karynne(LUISS Guido Carli University, Italy)
• Sithu, Jatinder(Erasmus University Rotterdam, Netherlands)