Alleviating the Agency Problem：Empirical Evidence on General Counsels in Top Management and Narcissistic CEOs

[Purpose]This study examines whether general counsels (GCs) in top management (TM) alleviate the agency problem of narcissistic CEOs. [Methodology]We employ data from S&P 1500 listed firms and earnings conference calls data for each CEO for measuring CEO narcissism, obtained from S&P Capital IQ, spanning the years 2012 to 2018. [Findings]This study finds that the presence of GCs in TM significantly alleviates pay disparity and excess pay associated with narcissistic CEOs. However, pay disparity and excess pay tend to increase as GCs are paid more, as the higher compensation may indicate an interest alignment between CEOs and GCs. [Implications]This study contributes to expanding the empirical evidence for the monitoring role of GCs and the agency problem associated with narcissistic CEOs.