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The Deliberate Engagement of Narcissistic CEOs in Earnings Management

Journal of business ethics, 2020-12, Vol.167 (4), p.663-686 [Peer Reviewed Journal]

Springer Nature B.V. 2020 ;The Author(s) 2019 ;Journal of Business Ethics is a copyright of Springer, (2019). All Rights Reserved. © 2019. This work is published under http://creativecommons.org/licenses/by/4.0/ (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;The Author(s) 2019. This work is published under http://creativecommons.org/licenses/by/4.0/ (the “License”). Notwithstanding the ProQuest Terms and Conditions, you may use this content in accordance with the terms of the License. ;ISSN: 0167-4544 ;EISSN: 1573-0697 ;DOI: 10.1007/s10551-019-04176-x

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  • Title:
    The Deliberate Engagement of Narcissistic CEOs in Earnings Management
  • Author: Buchholz, Frerich ; Lopatta, Kerstin ; Maas, Karen
  • Subjects: Business and Management ; Business Ethics ; Chief executive officers ; Chief executives ; Earnings ; Earnings management ; Education ; Ethics ; Executives (Business) ; Interest groups ; Management ; Management techniques ; Narcissism ; Original Paper ; Philosophy ; Quality of Life Research ; Studies
  • Is Part Of: Journal of business ethics, 2020-12, Vol.167 (4), p.663-686
  • Description: Corroborating upper echelons theory, this study picks up the notion that narcissistic chief executive officers (CEOs) take advantage of accounting choices to enhance their firms'—and inherently their own—personal track records. Using a set of 15 indicators, reflecting the narcissistic trait of 1126 CEOs for the period 1992 to 2012, we find evidence of highly narcissistic CEOs engaging in accrual-based earnings management (ABEM). In contrast to prior research, the results show evidence not only for income-increasing but also for income-decreasing ABEM. This indicates that highly narcissistic CEOs not only strive to influence stakeholders' perception of current performance. We conclude that they also assess their potential to influence perception of current and future earnings. The results imply that highly narcissistic CEOs' accounting choices are driven by self-serving behavior rather than by the intention to provide additional information to the market. When earnings management techniques are used to derive personal advantage from the presentation of a firm's earnings, the literature refers to this as a case of low earnings quality reflecting unethical behavior. Accordingly, this study contributes to the field of business ethics by showing that CEO narcissism is related to low earnings quality in that it is associated to discretionarily decreasing accruals.
  • Publisher: Dordrecht: Springer
  • Language: English
  • Identifier: ISSN: 0167-4544
    EISSN: 1573-0697
    DOI: 10.1007/s10551-019-04176-x
  • Source: ProQuest One Psychology
    Springer Nature OA/Free Journals
    ProQuest Central
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