Investigating the Effect of Narcissism of Managers on Stock Price Crash

Narcissism is a personality structure which has signs such as the penetration of personal desires, accountability from others and prejudice in cognitive processing. In most cases, narcissistic leaders are seeking big achievement in the company. They are shifted in the direction of implementing bold, operational strategies, and risky business decisions which leading to huge profit or loss at the end of the fiscal year. In this regard, this study examines the effects of narcissism of managers on stock price crash risk of 52 companies listed on the Tehran Stock Exchange during 2010 to 2014. Testosterone hormone and cash bonuses were two indicators which were used to measure narcissism of managers. Stock price crash risk were measured by both down-up volatility index and falling period of stock price were used. The results of the study showed that the testosterone hormone index and executives cash bonuses has a positive effect on down-up volatility index but they have negative effect on falling period of stock price.