Combining CEO narcissism with corporate innovation, and using CEO signature size as a proxy indicator of narcissism, this paper analyzes the impact of CEO narcissism on corporate R&D investment from the perspective of subconscious theory, examines the moderating role of equity incentive and firm diversification, deeply discusses that CEO power and risk appetite are the intermediary between the two factors, and further examines the influence of external environment such as product market competition and environmental uncertainty. This paper selects China’s A-share non-financial listed companies from 2007 to 2016 as research objects, and uses OLS regression, PSM and Heckman two-step methods to carry out the empirical test. The results show that CEO narcissism is significantly positively correlated with corporate R&D investment, that is, the higher the CEO’s narcissism degree is, the more R&D investment the enterprise makes. When the CEO has equity incentive, the narcissistic characteristic has a more significant impact on R&D investment. Compared with enterprises with a high degree of diversification, enterprises with a relatively low degree of diversification have a more significant positive impact on the relationship between them. Further study finds that the promotion effect of CEO narcissism on corporate R&D investment partly depends on the mediating effect of CEO power and risk appetite. In addition, under the influence of external environment, CEO narcissism has a more significant impact on R&D investment in the case of more intense market competition and less environmental uncertainty.
The contributions of this paper mainly include three aspects: First, it studies the impact of CEO narcissism on corporate R&D investment and its mechanism based on the theory of subconscious. Previous literature on enterprise innovation mainly focuses on the influence of managers’ external constraints or their own experiences from the perspectives of agency theory and brand theory, but ignores the influence of the CEO’s psychological characteristics formed by his own subconscious on enterprise innovation decisions. Second, the research perspective of innovation investment is deepened to the level of individual characteristics of the CEO. On the one hand, CEO signature size is used as the proxy index of CEO narcissism, which expands the measurement method of CEO narcissism. On the other hand, it proves that CEO power and risk appetite are some mediating factors, which expands the research on CEO narcissism and innovative decision-making from the perspective of the CEO’s background characteristics. Third, it examines the impact of CEO narcissism on R&D investment from the perspective of property rights, and finds that CEO narcissistic characteristics have a stronger impact on corporate R&D investment in private enterprises than in state-owned enterprises, which provides new evidence for the research on micro-factors of enterprise innovation of different property right nature at the present stage.