updated 7/11/2007 6:05:13 PM ET 2007-07-11T22:05:13

The bigger the ego, the wilder the ride.

Companies led by narcissistic CEOs tend to make more frequent strategy changes and larger acquisitions, according to a new study by Penn State University researchers.

"More narcissistic CEOs gravitate to bold and highly visible choices," wrote Penn State management professor Donald Hambrick and graduate lecturer Arijit Chatterjee. "Thus, narcissism may be thought of as an ingredient that stimulates distinctive, extreme managerial actions."

But the moves doesn't always amount to success.

"The greater the narcissism, the more extreme the companies' performance will be. Big wins or big disasters," Hambrick said Wednesday.

While there might be more ups and downs, companies led by more narcissistic CEOs don't do better or worse overall than companies with less narcissistic executives, the study found.

"It's just a wilder ride," Hambrick said.

Researchers measured the narcissism of 111 CEOs of computer software and hardware companies using indicators including the prominence of a CEO's photograph in a company annual report, the frequency of a CEO's name in a press release and the executive's pay compared to the second-highest company official.

They also looked at transcripts of interviews with CEOs to study how often a first-person singular pronoun was used.

Hambrick and Chatterjee developed an index, ranked the CEOs according to their levels of narcissism and analyzed company performance. Their study will be published in the Jan. 2008 edition the journal Administrative Science Quarterly.

Hambrick had consulted in the computer sector before, so he focused on that business because he had a hunch there might be variation among executives' egos, he said.

He credits former Chrysler Chairman Lee Iococca as being the forefather for today's flashy CEOs. The style has also been encouraged by factors including increasing emphasis on "pay-for-performance" stock options and a company's willingness to hire executives from the outside, he said.

"CEOs used to be content in being invisible, in being steady Eddies," Hambrick said.

Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware, said he wasn't surprised by the study's findings.

"This only emphasizes the need for strong independent boards to monitor these individuals," Elson said. "This really makes the point for effective corporate governance procedures in publicly traded companies."

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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