Narcissism and Cost of Debt: Evidence from Signature Size Data in China

Ying Li, Huiyang Zhou and Xiaohui Qu

Emerging Markets Finance and Trade, 2025, vol. 61, issue 10, 2936-2951

Abstract: This paper explores how CEO narcissism affects the cost of debt through strategic and disclosure channels. We use the size of CEOs’ signatures as a proxy for narcissistic personality traits and find that firms led by narcissistic CEOs tend to experience an increase in the cost of debt. Supporting our hypothesis, we document that CEO narcissism is positively related to corporate strategies and investment policies, but negatively related to high-quality financial reporting. The increase in the cost of debt prompted by narcissistic CEOs can be mitigated by a transparent information environment and improved corporate governance. Our study contributes to the understanding of the significant role that CEO narcissism plays in debt financing and in the practices of CEO recruitment.

Date: 2025
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DOI: 10.1080/1540496X.2025.2468359

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