Recruiting Dark Personalities for Earnings Management

Harris, Ling L.; Jackson, Scott B.; Owens, Joel; Seybert, Nicholas

doi:10.2139/ssrn.3775120

Cited by 3 publications

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“…External providers and their team members may have less fear of retribution, as, for them, it is merely another client, and thus, the risk of not reporting wrongdoing puts the reputation of the external provider as a whole at risk. Third, in line with the notion of Harris et al (2021) that organizations may specifically hire some managers with dark personality traits who are willing to push ethical boundaries in alignment with organizational objectives, not only hiring decisions but also internal control mechanisms may be affected by such considerations.…”

Section: Discussionmentioning

confidence: 95%

“…The authors also report that several of the participants with the highest psychopathy scores hold considerable rank and status within their respective organizations. Harris et al (2021) even provide experimental evidence suggesting that organizations may go as far as to particularly hire managers with dark personality traits because of their willingness to push ethical boundaries. Consequently, we explore whether organizations with managers who display these traits are more likely to engage in financial reporting manipulation.…”

Section: Introductionmentioning

confidence: 99%

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Dark Triad Managerial Personality and Financial Reporting Manipulation

2020

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Section: Discussionmentioning

confidence: 95%

Section: Introductionmentioning

confidence: 99%

Dark Triad Managerial Personality and Financial Reporting Manipulation

2020

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“…Various characteristics of a person with dark personality traits seem to be advantageous when rising to leadership positions in organizations (Babiak & Hare, 2006;Rovelli & Curnis, 2020). Organizations might even hire managers with dark personality traits because their willingness to push ethical boundaries aligns with organizational objectives (Harris et al, 2021).…”

Section: Introductionmentioning

confidence: 99%

Dark Triad Personality Traits and Selective Hedging

et al. 2021

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We study the relationship between risk managers’ dark triad personality traits (Machiavellianism, narcissism, and psychopathy) and their selective hedging activities. Using a primary survey of 412 professional risk managers, we find that managers with dark personality traits are more likely to engage in selective hedging than those without. This effect is particularly pronounced for older, male, and less experienced risk managers. The effect is also stronger in smaller firms, less centralized risk management departments, and family-owned firms.

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Dark Triad Managerial Personality and Financial Reporting Manipulation

2021

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We investigate the relationship between the dark triad personality traits (Machiavellianism, narcissism, and psychopathy) of managers and the practice of reporting manipulation using a primary survey of 837 professionals working in accounting and finance departments. We find that (a) managers who exhibit dark personality traits are associated with a higher prevalence of fraudulent accounting practices in their accounting and finance departments and (b) traditional risk management mechanisms are only partially effective in mitigating this effect. Internal audits are effective in curtailing the negative behavior of managers with dark triad traits only if these internal audits are outsourced and performed by independent external personnel but not if they are conducted by internal personnel. This suggests that managers with dark triad traits are able to manipulate other employees quite effectively. Consequently, having external personnel perform the auditing task provides a safeguard against such unethical practices and manipulation. This finding has strong practical implications, as it provides support for outsourcing internal audits rather than keeping them in-house.

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Recruiting Dark Personalities for Earnings Management

Cited by 3 publications

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Dark Triad Managerial Personality and Financial Reporting Manipulation

Dark Triad Managerial Personality and Financial Reporting Manipulation

Dark Triad Personality Traits and Selective Hedging

Dark Triad Managerial Personality and Financial Reporting Manipulation

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