Research from a former Rice University professor linked the size of CEO signatures to ego. CEOs with big egos entered into more risky, unreliable deals. Pexels

You've just been named CEO of a Fortune 500 company. Your ego fills the room. The laws of gravity don't apply to you.

And naturally, you want to make an impact. So you pour money into mergers and acquisitions, and when you're not trying to acquire another firm, you guide company resources into research and development. You're a genius, and the world will soon be clinging to your every new product.

The only problem: your company will likely underperform. Research by former Rice Business visiting professor Sean Wang (now at Cox School of Business as SMU), along with Nicholas Seybert of the University of Maryland and Charles Ham of Washington University at St. Louis, reveals the high costs of an out of control CEO ego.

The researchers' first challenge was establishing who could legitimately be called a narcissist. What does the term mean, exactly? While there are varying definitions, Wang's team focused on narcissism as a basic personality trait rather than a mental illness. As a personality trait, narcissism is associated with entitlement, vanity, authority, and a sense of superiority.

To spot narcissists, the team took a novel approach: they examined their research subjects' signatures. Signature size turns out to be a handy measure for egos, because it doesn't require participants to answer direct questions about their personalities — and because participants are unlikely to know that ego can affect something as simple as a signature.

Just having a big ego, though, does not a narcissist make. To validate a link between a person's signature and narcissism, the researchers asked 53 graduate business students to provide their signatures by signing a document, and then to take a personality survey that measured narcissism. The findings documented that indeed there was a strong correlation between signature size and narcissism.

Next, the researchers obtained data from prior psychology research on employee perceptions of 32 technology-firm CEOs. Of the 24 CEOS for whom the researchers also had signature samples, they found a significant correlation between narcissism and signature size.

Armed with these findings, Wang and his colleagues were able to extrapolate the narcissistic traits of thousands of CEOs whose signatures were readily available on proxy statements and other corporate documents. The researchers ultimately studied 741 CEOs from 411 firms during the period between 1992 and 2015, corresponding to 6,361 firm-year observations with a median of eight fiscal years per CEO.

They found a pronounced behavior pattern. Firms led by narcissistic CEOs invested more in high-exposure areas such as research and development and mergers and acquisitions, but shied away from routine capital expenditures for day-to-day productivity. This trend was even more pronounced during periods of financial slack, suggesting that narcissistic CEOs prefer an aggressive management style whenever possible. Financial productivity delivered by these narcissistic CEOs in terms of profitability was lower than their less egotistic counterparts.

The research has multiple implications. Narcissistic leaders, past research shows, are prone to make bad decisions — in part because they are bad listeners. As a result, they often dominate the decision process without incorporating feedback or ideas from others. Ironically, they mistakenly perceive this behavior as a signal of competence and strong leadership.

To counter these bad habits, the researchers say, during periods of financial sluggishness investors and corporate boards should combat excessive narcissist-led investment by pushing for higher dividend payouts. Given that narcissistic CEOs overinvest in R&D, investors also need to closely monitor whether such investments represent real innovation or just vanity. Finally, boards of directors should be aware that narcissistic leaders tend to command higher salaries — and consider whether their CEO falls into this category, and is essentially getting higher pay for inferior performance.

In short, to really be as boss as they see themselves, narcissistic corporate leaders need to recognize their tendencies and rigorously check their egos. Boards, meanwhile, should closely monitor their CEO's priorities in directing firm resources. It could be the writing on the wall.

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This article originally ran on Rice Business Wisdom.

Sean Wang is a former visiting assistant professor of accounting at Jones Graduate School of Business at Rice University. He is now an assistant professor at Cox School of Business at SMU.

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Houston team develops low-cost device to treat infants with life-threatening birth defect

infant innovation

A team of engineers and pediatric surgeons led by Rice University’s Rice360 Institute for Global Health Technologies has developed a cost-effective treatment for infants born with gastroschisis, a congenital condition in which intestines and other organs are developed outside of the body.

The condition can be life-threatening in economically disadvantaged regions without access to equipment.

The Rice-developed device, known as SimpleSilo, is “simple, low-cost and locally manufacturable,” according to the university. It consists of a saline bag, oxygen tubing and a commercially available heat sealer, while mimicking the function of commercial silo bags, which are used in high-income countries to protect exposed organs and gently return them into the abdominal cavity gradually.

Generally, a single-use bag can cost between $200 and $300. The alternatives that exist lack structure and require surgical sewing. This is where the SimpleSilo comes in.

“We focused on keeping the design as simple and functional as possible, while still being affordable,” Vanshika Jhonsa said in a news release. “Our hope is that health care providers around the world can adapt the SimpleSilo to their local supplies and specific needs.”

The study was published in the Journal of Pediatric Surgery, and Jhonsa, its first author, also won the 2023 American Pediatric Surgical Association Innovation Award for the project. She is a recent Rice alumna and is currently a medical student at UTHealth Houston.

Bindi Naik-Mathuria, a pediatric surgeon at UTMB Health, served as the corresponding author of the study. Rice undergraduates Shreya Jindal and Shriya Shah, along with Mary Seifu Tirfie, a current Rice360 Global Health Fellow, also worked on the project.

In laboratory tests, the device demonstrated a fluid leakage rate of just 0.02 milliliters per hour, which is comparable to commercial silo bags, and it withstood repeated disinfection while maintaining its structure. In a simulated in vitro test using cow intestines and a mock abdominal wall, SimpleSilo achieved a 50 percent reduction of the intestines into the simulated cavity over three days, also matching the performance of commercial silo bags. The team plans to conduct a formal clinical trial in East Africa.

“Gastroschisis has one of the biggest survival gaps from high-resource settings to low-resource settings, but it doesn’t have to be this way,” Meaghan Bond, lecturer and senior design engineer at Rice360, added in the news release. “We believe the SimpleSilo can help close the survival gap by making treatment accessible and affordable, even in resource-limited settings.”

Oxy's $1.3B Texas carbon capture facility on track to​ launch this year

gearing up

Houston-based Occidental Petroleum is gearing up to start removing CO2 from the atmosphere at its $1.3 billion direct air capture (DAC) project in the Midland-Odessa area.

Vicki Hollub, president and CEO of Occidental, said during the company’s recent second-quarter earnings call that the Stratos project — being developed by carbon capture and sequestration subsidiary 1PointFive — is on track to begin capturing CO2 later this year.

“We are immensely proud of the achievements to date and the exceptional record of safety performance as we advance towards commercial startup,” Hollub said of Stratos.

Carbon dioxide captured by Stratos will be stored underground or be used for enhanced oil recovery.

Oxy says Stratos is the world’s largest DAC facility. It’s designed to pull 500,000 metric tons of carbon dioxide from the air and either store it underground or use it for enhanced oil recovery. Enhanced oil recovery extracts oil from unproductive reservoirs.

Most of the carbon credits that’ll be generated by Stratos through 2030 have already been sold to organizations such as Airbus, AT&T, All Nippon Airways, Amazon, the Houston Astros, the Houston Texans, JPMorgan, Microsoft, Palo Alto Networks and TD Bank.

The infrastructure business of investment manager BlackRock has pumped $550 million into Stratos through a joint venture with 1PointFive.

As it gears up to kick off operations at Stratos, Occidental is also in talks with XRG, the energy investment arm of the United Arab Emirates-owned Abu Dhabi National Oil Co., to form a joint venture for the development of a DAC facility in South Texas. Occidental has been awarded up to $650 million from the U.S. Department of Energy to build the South Texas DAC hub.

The South Texas project, to be located on the storied King Ranch, will be close to industrial facilities and energy infrastructure along the Gulf Coast. Initially, the roughly 165-square-mile site is expected to capture 500,000 metric tons of carbon dioxide per year, with the potential to store up to 3 billion metric tons of CO2 per year.

“We believe that carbon capture and DAC, in particular, will be instrumental in shaping the future energy landscape,” Hollub said.

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This article originally appeared on our sister site, EnergyCapitalHTX.com.