How CEO narcissism affects earnings management behaviors
| Autor: | Sheng-Wei Lin, Fengyi Lin, Wen-Chang Fang |
|---|---|
| Rok vydání: | 2020 |
| Předmět: |
Economics and Econometrics
050208 finance ComputingMilieux_THECOMPUTINGPROFESSION Earnings Production cost education 05 social sciences ComputingMilieux_PERSONALCOMPUTING GeneralLiterature_MISCELLANEOUS Earnings management 0502 economics and business ComputingMilieux_COMPUTERSANDEDUCATION Economics Narcissism medicine Demographic economics 050207 economics medicine.symptom Big Five personality traits health care economics and organizations Finance |
| Zdroj: | The North American Journal of Economics and Finance. 51:101080 |
| ISSN: | 1062-9408 |
| Popis: | This study examined whether chief executive officers’ (CEOs) with narcissistic tendencies are more likely to execute earnings management behavior because of pressure to fulfill earnings thresholds. The results revealed that a CEO who exhibits high narcissism is more likely to be involved in earnings management to compensate for her/his performance. Our findings suggest that CEO narcissism directly influences financial decisions. Considering the earnings thresholds, firms with a more narcissistic CEO experience a regulatory effect on real earnings management behavior. Studies have indicated that CEOs manipulate earnings to satisfy three primary earnings thresholds: prior year’s reported earnings, zero earnings, and analysts’ forecasts. Our empirical results provide further evidence that CEOs engage in earnings management to fulfill positive earnings thresholds and analysts’ forecasts. We infer that CEOs use the abnormal production cost method as an underlying mechanism to increase reported earnings. Our findings help clarify the relationship between CEO personality traits and earnings manipulation to assist investors with decision-making. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
|
Full Text from ScienceDirect