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An exploratory study regarding the impact narcissistic CEOs have on the strategic dynamism of JSE listed companiesOechslin, Stephanie Elizabeth January 2015 (has links)
Thesis (M.Com. (Accountancy))--University of the Witwatersrand, Faculty of Commerce, Law and Management, School of Accountancy, 2015 / Many studies considering the effects CEOs‟ characteristics have on the companies
they run have been carried out in America. This study considers if organisational
outcomes and strategic choices are partially predicted by managerial background
characteristics as put forward by Hambrick and Mason (1984). It attempts to
determine if the personality traits of CEOs of JSE listed companies (which result in
them being classified as a narcissist) have an impact on the financial performance on
the company for which they work.
As identified by Chatterjee and Hambrick (2007), prior research has explored how
executive‟s characteristics are manifested in organisational outcomes, however very
little research addresses the narcissistic aspect of CEOs personalities.
This study explored whether a relationship exists between CEO narcissism and
strategic dynamism in a nonprobability, convenience sample.. A 5-item narcissism
index was used as a proxy for narcissism and financial leverage, overhead efficiency
and plant and equipment newness, were used to measure strategic dynamism. Multiple
regression was used to analyse the data by applying CEO narcissism as the
independent variable, strategic dynamism as the dependents variable whilst including
control variables, including the CEO tenure, the age of the CEO, the age of the
company, and indicator variable for the presence of a COO, the phase of the economy
during which the CEO served his tenure and an indicator variable for which industry
the company is operating in. The results of this study revealed that there is a
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correlation between the level of narcissism, captured using unobtrusive measures, of a
JSE listed company‟s CEO and the level of strategic dynamism of that company.
The results of the regression models suggest that whilst there is no observable
relationship between narcissism and strategic dynamism, there is a relationship
between narcissism and two of the components of strategic dynamism, financial
leverage and plant and equipment newness.
This research contributes further to the study of the effect of narcissistic CEO‟s on the
companies for which they work and suggests that the personality traits of CEOs
should be considered by company boards and shareholders when deciding to elect a
person as CEO as well as by investors when deciding which companies to invest in.
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