Relationship between CEO Narcissism and Earnings Management: the moderating role of governance and ownership
جاري التحميل...
التاريخ
المؤلفين
عنوان الدورية
ردمد الدورية
عنوان المجلد
الناشر
Journal of Economics Finance and Accounting
خلاصة
This paper examines the role of management personality in corporate governance system and, more specifically, within the context of firms’ accounting decisions. In particular, we examine the relation between a firm’s CEO narcissism and the extent of earnings management the firm is engaged in.
Methodology -Our sample includes French firms listed on the CAC All-Tradable from 2012 to 2015. Narcissism is a psychological construct defined as a sense of self-importance and uniqueness, entitlement, self-absorption, self-admiration, arrogance, exhibitionism, exploitativeness, and vanity. We measure CEO narcissism using a composite score based on the CEO photo prominence in the annual report, the existence of a CEO signature in the annual report, and a CEO's use of first-person personal pronouns.
Findings-we provide evidence that firms with narcissistic CEOs are more likely to engage in behavior of earnings manipulation to present better earnings. This finding suggests that CEOs are the driving force behind a firm’s engagement in accounting manipulation. They expend considerable resources to achieve their goals, including engagements in unethical behavior. We also find a negative moderating effect of board size, board independence and institutional ownership on the relationship between CEO narcissism and earnings management.
Conclusion-Thesefindingssuggestthat efforts made by political bodies to promote the best practices in corporategovernance are beneficial for French-listedcompanies to control narcissisticCEOs and limitearnings management practices.