John Kim’s research on CEO narcissism and insider trading accepted by top finance journal

by Weishen Wang, Chair of the Department of Finance

I am thrilled to share some exciting news about one of our assistant professors:  John Kim. His co-authored article, “CEOs’ narcissism and opportunistic insider trading” has been accepted for publication at the Journal of Corporate Finance (JCF), a top journal in finance with an A* rating from ABDC.   In the study, John and his coauthor find CEOs with a higher level of narcissism engage in opportunistic insider trading more intensely. This finding holds after controlling for endogeneity issues.  The complete abstract is below:

Abstract

Narcissism is a multifaceted personality trait that profoundly influences individuals’ cognition, emotions, and actions. This study investigates the relationship between narcissistic CEOs and their engagement in opportunistic insider trading. Utilizing a quantitative measure of CEOs’ narcissism derived from textual analysis, we find that CEOs with a higher level of narcissism engage in opportunistic insider trading more intensely. To mitigate endogeneity concerns, we employ various rigorous approaches, including matching, instrumental variable, Heckman’s two-step sample selection model, and falsification tests. Through cross-sectional analysis, we find that the impact of CEOs’ narcissism on opportunistic insider trading is more pronounced among CEOs with limited legal knowledge, facing weaker external and internal monitoring pressure, working at larger firms, and being male. In addition, we demonstrate that the insider trades of narcissistic CEOs are less profitable and less informative than those of non-narcissistic CEOs, as evidenced by subsequent stock performance.

John completed his doctoral studies at Temple University and brought a wealth of industry experience to academia. In his year and a half with us, he has proven to be an exceptional teacher, researcher, and colleague.

Please join me in congratulating John on this remarkable accomplishment!