Applied Sciences

See discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/268528664

Corporate Social Responsibility or CEO Narcissism? CSR motivations and

organizational performance

Article  in  Strategic Management Journal · November 2014

DOI: 10.1002/smj.2348

CITATIONS

133 READS

8,056

4 authors:

Some of the authors of this publication are also working on these related projects:

First, do not harm: The benefit of ambiguity in CEO congressional testimony. View project

Data breach and intra-industry contagion. View project

Oleg Petrenko

Texas Tech University

12 PUBLICATIONS   145 CITATIONS

SEE PROFILE

Federico Aime

Oklahoma State University – Stillwater

31 PUBLICATIONS   779 CITATIONS

SEE PROFILE

Jason W. Ridge

University of Arkansas

23 PUBLICATIONS   478 CITATIONS

SEE PROFILE

Aaron D. Hill

Warrington College of Business – University of Florida

36 PUBLICATIONS   803 CITATIONS

SEE PROFILE

All content following this page was uploaded by Aaron D. Hill on 30 April 2018.

The user has requested enhancement of the downloaded file.

Strategic Management Journal Strat. Mgmt. J., 37: 262–279 (2016)

Published online EarlyView 14 January 2015 in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/smj.2348 Received 11 November 2013; Final revision received 17 October 2014

CORPORATE SOCIAL RESPONSIBILITY OR CEO NARCISSISM? CSR MOTIVATIONS AND ORGANIZATIONAL PERFORMANCE OLEG V. PETRENKO,1 FEDERICO AIME,1* JASON RIDGE,2 and AARON HILL1 1 Department of Management, Oklahoma State University, Stillwater, Oklahoma, U.S.A. 2 Department of Management, Clemson University, Clemson, South Carolina, U.S.A.

This study builds on insights from both upper echelons and agency perspectives to examine the effects on corporate social responsibility (CSR) practices of CEO’s narcissism. Drawing on prior theory about CEO narcissism, we argue that CSR can be a response to leaders’ personal needs for attention and image reinforcement and hypothesize that CEO narcissism has positive effects on levels and profile of organizational CSR; additionally, CEO narcissism will reduce the effect of CSR on performance. We find support for our ideas with a sample of Fortune 500 CEOs, operationalizing CEO narcissism with a novel media-based measurement technique that uses third-party ratings of CEO characteristics with validated psychometric scales. Copyright © 2015 John Wiley & Sons, Ltd.

INTRODUCTION

Researchers in strategic management, economics, and finance have examined a variety of explanations for managerial decisions to spend organizational time and effort enhancing corporate social responsi- bility (CSR). A considerable emphasis of this litera- ture has been to adopt a stakeholder lens (Donaldson and Preston, 1995; Freeman, 1984) to either norma- tively evaluate the merits of CSR or to instrumen- tally consider how CSR affects organizational finan- cial performance (e.g., McWilliams and Siegel, 2000; Ramchander, Schwebach, and Staking, 2012; Waddock and Graves, 1997; Wright and Ferris, 1997). More recently, researchers have focused more directly on studying the determinants of CSR.

Keywords: upper echelons; CEO narcissism; corporate social responsibility; organizational performance; strategic decisions *Correspondence to: Federico Aime, 205 Business Building, Stillwater, OK, 74078, U.S.A. E-mail: aime@okstate.edu

Copyright © 2015 John Wiley & Sons, Ltd.

These researchers have looked at both external drivers like, for example, the salience of exter- nal stakeholders (Agle, Mitchell, and Sonnenfeld, 1999), stakeholder activism (Clark and Hebb, 2004; David, Bloom, and Hillman, 2007; Marquis, Glynn, and Davis, 2007; Sen, Gurhan-Canli, and Morwitz, 2001), or institutional pressures (Neubaum and Zahra, 2006) and internal drivers like, for example, executive incentives (e.g., Deckop, Merriman, and Gupta, 2006; McGuire, Dow, and Argheyd, 2003), management team commitment to ethics (Muller and Kolk, 2010), and CEO political ideologies (Chin, Hambrick, and Treviño, 2013) as antecedents to CSR. Among this research on determinants of CSRs, the vast majority of the studies have explored the effects of external normative values (e.g., the ethical concerns of particular stakeholder groups or of the institutional environment) on CSRs owing to the fact that these reflect a form of alignment of firm policy to its stakeholder value preferences; fewer have examined the effects of internal values at the organizational or individual levels (e.g., the

This research is focused on the driving forces of CRS – that is both external stakeholders and stake holders activism
the determinant of CRS includes a variety of studies in other to explore the effect of external normatives, ethical concerns in a stakeholder group or institution. For the fact that CRS reflect in the alignment of firm policies and procedures its stakeholders value preferences can be fully examined by the effect of internal value or individual ethical concerns
and also internal driving forces

Corporate Social Responsibility or CEO Narcissism? 263

ethical concerns or the political ideology of top management) on CSR; and very few have stud- ied the effects of psychological characteristics of individuals on CSR (e.g., Aguilera et al., 2007). This emphasis of values over other psychological characteristics as explanations for CSR is proba- bly expected given that CSR is a value loaded con- cept defined as “actions that appear to further some social good, beyond the interests of the firm and that which is required by law” (McWilliams and Siegel, 2001: 117). But the scarcity of research relating executives’ psychological characteristics to CSR is striking given the emphasis of upper echelons work on the effects of executive personality characteris- tics on firm strategic decisions.

The present study shifts the attention more squarely to executive psychology as an explanation for CSR, showing that CSR initiatives may result from leaders’ personal needs for attention and image reinforcement and how such initiatives may be less strategic in terms of financial performance and focus for their organizations. Researchers in management have shown that the characteristics of top executives, and especially CEOs, affect organizational decisions and behaviors (Chatterjee and Hambrick, 2007; Finkelstein and Hambrick, 1996; Hambrick, 2007; Hambrick and Mason, 1984; Sanders, 2001b). Intangible decisions like involvement in CSR present a considerable opportunity for these decisions to be affected by executive’s characteristics because such actions rarely present a situation where probabilities can be easily calculated or outcomes be certain. In line with this logic, Weidenbaum and Jensen (2009: xi) challenge readers to “merely consider the ability of the CEO of a major company to satisfy his whim in terms of the selection of charities and pet causes that the organization will support,” pointing to the risk of CSR choices being more closely tied to personal drivers than to organizational stakeholder logic. We argue in this paper that organizations with CEOs that have a high need for attention and are preoccupied with having their positive self-views reinforced will engage in higher levels of corporate social responsibility.

Specifically we are concerned in this paper with how CEO narcissism may affect organizational CSR because narcissistic CEOs have a high need for attention and praise as well as a strong desire to have their positive self-views reinforced, which has been shown to affect CEO decision making (Chat- terjee and Hambrick, 2007; Gerstner et al., 2013).

Narcissists seek to broadly and constantly generate what Kernberg (1975) called “narcissistic supply”, the reinforcement to self-image derived from per- sonal exhibitionism or from external adulation and flattery (Bogart, Benotsch, and Pavlovic, 2004; Wal- lace and Baumeister, 2002). Since CSR activities offer a difficult to assess opportunity for attracting observers’ attention, gaining praise from internal (e.g., employees) and external (e.g., media) stake- holders, and achieving notoriety, we expect more narcissistic CEOs—defined as CEOs who have inflated views of themselves and who seek to have those positive self-views continuously reinforced (Campbell, Goodie, and Foster, 2004; Chatterjee and Hambrick, 2007)—to engage their organiza- tions in more CSR initiatives as a way to enhance their moral feelings of superiority and to attract attention and praise. In essence, for example, an executive’s decision to spend organizational efforts to enhance CSR can have significant benefits for the executive such as attention in the media and positive praise from employees and the community. Just as celebrities generate attention for themselves by participating in charitable events, chief execu- tives can make themselves noticeable through their firms’ CSR activities. Journalists and other organi- zational stakeholders frequently comment that most organizations make a show of embracing corpo- rate responsibility activities (e.g., Lewis, 2008) and CEOs are often personally positioned at the center of praise or criticism when it comes to the social behaviors of their organizations. Yet, despite their high potential contribution to the CEOs’ narcis- sistic supply, CEOs’ personal needs for attention and image reinforcement have been largely absent from CSR research. In line with this logic, we first hypothesize and find that organizations controlled by narcissistic CEOs will engage in more CSR. In line with this same logic, we also look at spe- cific actions that receive media acclaim and show that narcissistic CEOs are more likely to seek such recognition from the media through their organiza- tions’ philanthropic actions.

Finally, we address the strategic implications of the influence of CEOs’ personal interests on CSR. We specifically show that CEO narcissism will negatively moderate the relationship between CSR and firm performance. This last finding is important for the discussion of the relationship between CSR and firm performance because it highlights a CSR cost that may not even be values driven, like in Friedman’s depiction of CSRs as “spending

Copyright © 2015 John Wiley & Sons, Ltd. Strat. Mgmt. J., 37: 262–279 (2016) DOI: 10.1002/smj

The concerns of this article is much concern about some behavior of CEO that might have a negative feedback on CRS. Because since Narcissism are the people that has a strong desire for self praise this might affect the rules of engagement.
Considering the ability of the CEO to make major decisions to satisfy the company in terms of the selection of charities and causes that the company will support will show the risk involved and this can be closely related to personal drive than organistional stakeholders logic. This article revealed that CEOs with high need of attention can be preoccupied with having their positive self views and this will result to higher level of corporate social responsibility.
Since Narcisissist has the tendencies to generate narcissistic supply, with the feel of reinforcing self image derived from personal exhibitionism or flattery. Since CRS can attract praise from both internal and external shakeholders, in other to notoriety, as a result Narcissist CEO tend to see CRS as a way to inflate their views and also have those reinforced views constantly.
this article draws our attention to executive psychology while talking about CRS because CRS initiative results may be yield from leaders, with the need for attention to portray their company in a way to reinforce such initiative. they many have less strategic in financial performance for their organization. and it is clear that the character of top executive can actually determine the organization behavior and decisions
in organisations it is more easy for narcissist CEO to seek recognition from the media through their company philanthropic actions

264 O. V. Petrenko et al.

someone else’s money for a general social interest” (Friedman, 1970: 174), but more explicitly within the realm of residual agency cost. The potential for leaders to make CSR choices to fulfill their personal needs may put at issue the idea that while CSR can certainly be a valuable strategic choice for firms, they can also be nonstrategic when driven by managerial self-interest. Given the complex nature of the relationship between CSR and financial performance, with about half of the studies on the relationship between CSR and financial perfor- mance reporting positive relationships and the rest of the studies suggesting mixed or nonsignificant findings (Chin et al., 2013; Margolis and Walsh, 2003), it is important to examine determinants of CSR that may be not strategic as in the case of managers acting for their own interest.

To test our ideas, we conducted an empirical study Fortune 500 CEOs over a 10-year period. We used the Kinder, Lyndenberg, and Domini (KLD) CSR database for our measurement of corporate social responsibility and COMPUSTAT for our measurement of accounting financial performance and a wide array of control variables. To avoid the limitations of proxy-based measures for assessing psychological constructs (Carpenter, Geletkanycz, and Sanders, 2004), we utilize a new approach to the measurement of CEO characteristics. Specifi- cally, based on a wide array of psychology research showing the value and accuracy of third-party rat- ings (e.g., Arthur et al., 2003; Connelly and Ones, 2010; Oh, Wang, and Mount, 2011), we develop a video-based measurement of CEO characteristics that allows us to evaluate CEOs on narcissism with a validated narcissism scale (Svindseth et al., 2008). We find substantial support for our hypotheses.

This study makes several contributions to research. First, it contributes to upper echelons research on CEO narcissism by showing that CSR is an especially pertinent domain to generate “narcissistic supply”. Second, it contributes to methods in upper echelons research by utilizing a new, theory-based method to measure CEO charac- teristics in an unobtrusive way. As explained later in the manuscript, the video-based psychometric approach to the measurement of narcissism that we utilize in this paper can provide a significant new tool to the upper echelons literature for the measurement of a wide array of personal charac- teristics of leaders that were previously difficult to assess consistently for strategy researchers. Third, this research also contributes to agency

theorizing. Drawing on upper echelons theory we find that narcissism may result in agentic behaviors that may have negative financial implications for organizations. Finally, we contribute to research on corporate social responsibility. We introduce narcissism as a novel determinant of CSR and suggest that motivations for CSR that are not strategic, like CEO narcissism, may help explain the mixed findings in the relationship between CSR and firm performance.

THEORY AND HYPOTHESES

Narcissism and corporate social responsibility

The concept of CSR refers to voluntary manage- rial “actions that appear to further some social good, beyond the interests of the firm and that which is required by law” (McWilliams and Siegel, 2001: 117; see also Waddock, 2004). When man- agers look beyond shareholders and decide to exert organizational effort on employees, customers, the environment, and other stakeholders, they have con- siderable discretion as such decisions are difficult to evaluate (Margolis and Walsh, 2003; Waldman and Siegel, 2008). Building on the logic of the upper echelons perspective, CEOs will have a significant influence in such discretionary decisions and there- fore a firm’s propensity to engage in CSR may be affected by chief executives’ preferences and pri- orities that derive from their values and personali- ties (Chatterjee and Hambrick, 2007; Gerstner et al., 2013; Hambrick and Mason, 1984).

Because top executives, and especially CEOs, can affect the behaviors and outcomes of firms and have substantial influence on organizational efforts and outlays (Chandler, 1962; Finkelstein and Hambrick, 1996), researchers have explored the psychological qualities and experiences of top executives to understand organizational behaviors and outcomes. For example, research has shown that top executives’ personality (Kets de Vries and Miller, 1985), charisma (Flynn and Staw, 2004), and locus of control (Miller, Kets de Vries, and Toulouse, 1982) affect organizational outcomes. More recently, Chatterjee and Hambrick (2007, 2011) have shown the impact of CEO’s narcis- sism on firm strategies. They found that narcissism predicts the dynamism and grandiosity of firms’ strategic actions and that narcissistic CEOs react differently to their success and seek social praise (Chatterjee and Hambrick, 2011).

Copyright © 2015 John Wiley & Sons, Ltd. Strat. Mgmt. J., 37: 262–279 (2016) DOI: 10.1002/smj

This shows that there are tendencies for CEO to use CRS as a means to fulfil their personal needs. and it this is driven by managerial self interest it may hamper the policies of CSR.
Therefore Narcissism can result in agentic behaviors that can hinder the and create negative implication on the organization

Corporate Social Responsibility or CEO Narcissism? 265

Narcissistic individuals construe reality in part as it reflects on their self-image and are constantly seeking attention and reinforcement of their positive self-views (Campbell et al., 2004; Chatterjee and Hambrick, 2007, 2011). An organization’s social responsibility projects and overall external percep- tions often bring attention in the form of praise or criticism not just to the firm, but often more directly to the CEO. As such, these projects are likely to engage aspects of the CEO’s self-image. There are at least three reasons to view CSR initiatives as providing an especially relevant domain to gener- ate narcissistic supply for narcissistic CEOs. First, CSR are value loaded initiatives that appear to fur- ther some social good and offer an opportunity for exhibitionism (Bogart et al., 2004) by taking the moral high ground on socially acceptable behaviors. Second, CSR engages sets of value sensitive audi- ences in adulation, media attention, and praise, all of which are external sources of narcissistic sup- ply (Wallace and Baumeister, 2002). Finally, CSR offers a variety of avenues to change the status quo supplying continuity and variety to the opportuni- ties narcissistic CEOs have to exhibit themselves to attentive and responsive audiences.

Additionally, while most CEOs may want to avoid criticism for negative CSR, narcissistic CEOs will be more strongly motivated to abstain from socially irresponsible actions that can bring easy criticism from investors, media, the public or employees because narcissists respond particularly negatively to criticism (Kernis and Sun, 1994; Rhodewalt and Morf, 1998; Rhodewalt and Sorrow, 2003) and therefore avoid it. Social responsibility can be viewed as a continuum with extremes being “socially responsible” and “socially irresponsible.” Because discrimination, lawsuits, scandals, and similar CSR concerns often bring about serious criticism of the CEO, narcissistic CEOs are likely to avoid engaging in negative CSR. This logic may seem at odds with the idea that narcissists will seek attention at any cost, even when such attention implies negative attention. For example, narcis- sistic CEOs have been found to favor acquisitions because, even when acquisitions “do not always garner positive acclaim (Shleifer and Vishny, 1991; Sirower, 1994), they are highly visible, attract the audience that is needed by the narcissistic CEO” (Chatterjee and Hambrick, 2007: 359). But avoid- ing negative CSR or, more specifically, eliminating CSR concerns, just like allowing CSR concerns to emerge, is subject to media attention, but in

a positive tone and with much less institutional cost. Consistently, narcissistic CEOs are likely to seek positive attention by avoiding the emergence of CSR concerns and working to reduce existing CSR concerns. Therefore, we expect narcissistic CEOs to approach or be motivated to engage in positive CSR initiatives and to avoid negative CSR developments in their organizations, creating a positive relationship between CEO narcissism and organizational CSR.

Hypothesis 1: There will be a positive relation- ship between CEO narcissism and corporate social responsibility.

Narcissism and high profile corporate philanthropy

As we previously noted, narcissists are exception- ally susceptible to adulation, media attention, and praise, all of which are external sources of narcis- sistic supply (Wallace and Baumeister, 2002). This need for adulation and praise implies that narcissists are more likely to behave as exhibitionists (Raskin and Terry, 1988) and are preoccupied with receiv- ing attention from others (Kernberg, 1975, 1986; Kohut, 1977). Therefore, narcissistic CEOs can be expected to favor especially visible initiatives that reflect on themselves, like for example philan- thropic initiatives that attract media attention and praise because, even when spending organizational effort in such actions may draw some criticism from sectors of the investor community and media, nar- cissistic CEOs are “exceptionally emboldened by social praise” (Chatterjee and Hambrick, 2011: 202) and will engage in more bold and noticeable actions than less narcissistic CEOs. High profile philan- thropic actions are a noticeable example of actions that will attract both praise and attention for the CEO, because they are usually both construed as contributing to a social good and reflective of the CEOs values or preferences. As such, we expect a positive relationship between CEO narcissism and the high profile of their corporate philanthropy. We focus here on predictions about the media profile of the philanthropic actions by firms because, if nar- cissists are likely to engage in CSR in order to gen- erate social approval as we argue in our previous hypothesis, predicting differences in the corporate philanthropy media profile of firms run by more narcissistic CEOs provides additional evidence for the mechanisms in our theory.

Copyright © 2015 John Wiley & Sons, Ltd. Strat. Mgmt. J., 37: 262–279 (2016) DOI: 10.1002/smj

266 O. V. Petrenko et al.

Additionally, two aspects of narcissistic person- ality profiles suggest that narcissistic CEOs will not only engage their organizations in higher pro- file philanthropic initiatives, but will also be driven to continue such initiatives that reward them with media or analyst praise. First, narcissists have a ten- dency to be restless (Deluga, 1997), to constantly seek attention and reinforcement of their positive self-views (Campbell et al., 2004; Chatterjee and Hambrick, 2007, 2011), and to maintain protag- onism (Bogart et al., 2004; Morf and Rhodewalt, 2001). Second, research on narcissists’ responses to environmental feedback (Kernis and Sun, 1994; Rhodewalt and Eddings, 2002) suggests that narcis- sists will be particularly responsive to visible social praise and attention (Vazire and Funder, 2006) and respond to praise with additional effort (Chatter- jee and Hambrick, 2011; Wallace and Baumeis- ter, 2002). Narcissism and the reinforcement of self-images resulting from the high profile of their corporate philanthropy will provide an avenue for narcissistic CEOs to maintain protagonism. While we expect that all CEOs are going to continue to commit to actions that have generated positive media attention for them, we expect that narcissistic CEOs will be more responsive to the media atten- tion resulting from such actions (Chatterjee and Hambrick, 2011). Implicit in this hypothesis is that we expect both narcissism and previous high pro- file corporate philanthropy to have positive direct and interactive effects on later high profile corporate philanthropy. Therefore, we hypothesize that more narcissistic CEOs will be more likely to continue to generate higher profile corporate philanthropy than their less narcissistic peers:

Hypothesis 2: CEO narcissism will positively moderate the relationship between prior corpo- rate philanthropy media profile and current cor- porate philanthropy media profile.

Narcissistic CSR and financial performance

A dominant concern of the CSR literature has been the concern with the instrumental relation- ship between CSR and firm financial performance. Researchers have argued that CSR can serve as strategic choices that may lead to firm perfor- mance because, by focusing on stakeholders other than the shareholders, CSR reduces the cost of committing resources to the organization (Hill- man and Keim, 2001; Jones, 1995; Turban and

Greening, 1997), reduces risk premiums, (Cornell and Shapiro, 1987), provides insurance protection against litigation and regulation costs (Kacper- czyk, 2009), serves as advertisement and goodwill (Knauer, 1994), and enhances corporate reputation (Schnietz and Epstein, 2005). With findings about the relationship between CSR and firm performance generally positive but mixed, the question remains: if CSR choices are made in part based on CEO char- acteristics, or more specifically to satisfy narcissis- tic CEOs needs for praise and attention, will they be less likely to relate to financial performance?

We expect CEO narcissism to moderate the pos- itive relationship between CSR and firm financial performance for three main reasons. First, CSR decisions by narcissistic CEOs are less likely to be aligned with consideration of organizational out- comes, and therefore CEO narcissism will mod- erate the relationship between CSR by their firms and organizational performance. Narcissistic CEOs consider themselves highly intelligent and superior in their ability to control the environment (Campbell et al., 2004; Judge, LePine, and Rich, 2006; Pratto et al., 1994) and are much less responsive to objec- tive performance indicators compared to their less narcissistic peers (Chatterjee and Hambrick, 2011). As such, narcissistic CEOs’ strong confidence in their ability to control the environment and their need to attract attention and praise are more likely to result in CSR decisions that disregard the effects on stakeholders beyond simple praise and enhance their own reputation above the organizational rep- utation, therefore leading to CSR efforts with less positive effects on firm performance.

Second, because CSRs can have negligible or even negative effects on performance in the absence of absorptive capacity or complementary assets (Darnall and Edwards, 2006; Zahra and George, 2002), CSR by firms with more narcissistic CEOs who are more likely to disregard the availability of complimentary resources in the organization because of their lower responsiveness to indicators and strong sense of personal ability to control their environment (Campbell et al., 2004) should have a less positive relationship with organizational performance.

Finally, the tendency of narcissists to be rest- less (Deluga, 1997), to constantly seek attention and reinforcement of their positive self-views (Camp- bell et al., 2004; Chatterjee and Hambrick, 2007, 2011), and to maintain protagonism (Bogart et al., 2004; Morf and Rhodewalt, 2001), will be reflected

Copyright © 2015 John Wiley & Sons, Ltd. Strat. Mgmt. J., 37: 262–279 (2016) DOI: 10.1002/smj

Corporate Social Responsibility or CEO Narcissism? 267

in their engagement in multiple and widely varied CSR initiatives with different sets of stakeholders. This will result in a widely unconcentrated CSR effort that will aid them in avoiding feelings of bore- dom (Wink and Donahue, 1997) and satisfy sensa- tion seeking (Emmons, 1981) in their contact and interaction with multiple constituencies. This ten- dency of narcissistic CEOs to be broad and scattered in their decisions affecting CSR leads the situation when the CSR efforts by firms with more narcis- sistic CEOs may be seen by stakeholders as less regular or ad-hoc (Husted and Salazar, 2006; Vergne and Durand, 2010), or as simple responses to exter- nal pressure (Frooman, 1999) reducing the credibil- ity of a serious commitment to stakeholder interests and therefore reducing its impact on firm financial performance.

Therefore, CSR by organizations with highly nar- cissistic CEOs may not have as positive or efficient effects on the cost of committing resources to the organization, risk premiums, and corporate reputa- tion, as those by organizations with less narcissis- tic CEOs. CEO narcissism may negate or diminish the mechanisms that link CSR decisions with orga- nizational outcomes and provide one explanation for some of the mixed findings in some previous research. We argue that the level of CSR of organi- zations with more narcissistic CEOs is less likely to be positively related to financial performance than CSR of organizations with less narcissistic CEOs.

Hypothesis 3: CEO narcissism will negatively moderate the relationship between CSR and performance.

METHODS

Sample and data collection

Our annual financial and corporate data come from Standard and Poor’s COMPUSTAT industrial databases, our corporate social responsibility data come from the KLD database (Godfrey, Merrill, and Hansen, 2009; Orlitzky and Benjamin, 2001), and our CEO characteristics data was collected with a novel video survey methodology. Our starting pop- ulation included all S&P 500 firms between the years 1997 and 2012 inclusive, and excluded 24 pri- vate firms for which no financial data is available in COMPUSTAT. Following prior research, we then excluded 69 firms in highly regulated industries

such as financial, insurance, and utilities. Firms in highly regulated industries such as financials are not only subject to differences in their regulatory environments that limit discretion of these firms’ CEO over outlays such as CSR (McNamara, Aime, and Vaaler, 2005; Sanders, 2001a) but also their results are not comparable with those of other indus- tries based on differences in accounting criteria (McGahan and Porter, 1997). To verify these the- oretical rationales, we run K-S tests to verify if the distributions of CSR and performance variables are different for regulated firms and especially financial firms compared to others in the population. There were significant differences with respect to compar- ison variables; p-values for ROA and CSR measures ranged from 0.000 to 0.01 for both financials specif- ically and regulated industries as a whole when compared with the broader population of firms. We identified the CEO for every firm in 2007 and included all firm-years in this time-frame for which they were CEOs of their respective firms. We then imposed four necessary filters on our data. First, we omitted 15 CEOs who held temporary appointments (e.g., interim, acting) because the effects on firms of temporary CEOs are different to those of per- manent CEOs (Ballinger and Marcel, 2010). Sec- ond, we excluded 16 CEOs that were with their companies for only one year. Third, we omitted 139 CEOs because adequate videos (as discussed in the Measurement of narcissism section of the paper) were unavailable through public sources. Finally, we excluded 86 firms for which data was not avail- able in the KLD database. The final sample repre- sented in our models ranges between a total of 911 and 1,051 CEO-year observations based on con- trol and year lag availabilities, for which financials and corporate social responsibility were measured annually for each CEO-year available in the sample. We assessed the representativeness of the sample by comparing included and nonincluded firms/CEOs in the final sample using the Kolmogorov-Smirnov (K-S) two-sample test (e.g., Siegel and Castellan, 1988; Westphal and Bednar, 2005). K-S tests if the distribution of given variables are different for firms/CEOs in the final sample compared to others in the broader population. There were no signifi- cant differences with respect to variables included in the study that were available for the broader pop- ulation, including measures of CSRs, CEO duality, CEO age, CEO ownership, CEO tenure, short and long term pay, ROA, TQ, and Market Value Added); p-values ranged from 0.19 to 0.65.

Copyright © 2015 John Wiley & Sons, Ltd. Strat. Mgmt. J., 37: 262–279 (2016) DOI: 10.1002/smj

268 O. V. Petrenko et al.

Order now and get 10% discount on all orders above $50 now!!The professional are ready and willing handle your assignment.

ORDER NOW »»