Influence of Narcissistic CEOs on Corporate Social Responsibility (CSR) Choices: The Moderating Role of the Legal Environment

PURPOSE: During recent years, there has been a growing interest in CSR across disciplines. Various scholars document that Chief Executive Officer (CEO) narcissism is an important factor that should not be overlooked when analyzing CSR. Research on the relationship between CEO narcissism and CSR has treated CSR as a whole construct. However, little attention has been paid to its effect on different dimensions of CSR, especially the same psychological trait may have effects on charitable donations and employee welfare. The purpose of the study is to explore the relationship between CEO narcissism and charitable donations and employee welfare, while taking into account the moderating role of the legal environment. METHODS: This study used the video survey method to measure CEO narcissism, the video information was obtained from Baidu.com and hao.360.com search engines. Other data were collected from Chinese Stock Market Research (CSMAR) database. We used OLS regression for data analysis and also used Tobit regression model to check the robustness of the estimation results. Meanwhile, all analyses will be performed with Stata 16.0 software. RESULTS: Empirical analysis reveals that CEO narcissism has a positive and significant impact on charitable donations and has a negative and significant impact on employee welfare. Moreover, the legal environment will reduce the effect of CEO narcissism on charitable donations and employee welfare, indicating that a stronger legal environment could attenuate the effect of CEO personality traits, especially narcissism on charity donations and employee welfare. CONCLUSION: This study contributes to the behavioral finance theory and stakeholder theory to better understand the relationship between CEO narcissism and charitable donations and employee welfare. Meanwhile, this study is one of the few studies to investigate the patterns of CSR activities in China, an important emerging economy.