How Does CEO Narcissism Impact the Effectiveness of Advertising on Firm Performance? A Study in the Restaurant Industry Context

The current study investigates the critical role of chief executive officer (CEO) narcissism as an important boundary condition that explains the contrasting results of advertising spending on firm performance. To address this point, two studies are conducted from the companies' and consumers' perspectives. Study 1 examines the intangible asset value of advertising by using 352 observations of publicly traded restaurant companies over the past 16 years, revealing that as companies with highly narcissistic CEOs invest a greater amount of advertising, greater firm sales and firm value are induced. To explain the potential reasoning behind the narcissistic CEOs' performance with advertising, Study 2 compares consumer responses to high versus low narcissism-themed ads, assuming that narcissistic CEOs would frequently deliver CEO-narcissistic messages to the end users and that consumers eventually determine firm sales and value. The results reveal that consumers in the high narcissistic ad condition perceive greater CEO self-confidence, ad spending, company size, ad trust, and attitudes toward the ad than those in the low narcissistic ad condition. The conceptual model confirms that CEO narcissism increases consumer perceptions of CEO confidence and ad spending, resulting in greater trust toward the ad and intention to visit the restaurant.