The impact of CEO narcissism on earnings management

Francesco Capalbo, Alex Frino, Ming Ying Lim, Vito Mollica, Riccardo Palumbo

Research output: Contribution to journalArticle

14 Citations (Scopus)

Abstract

We provide the first empirical test of the relation between CEO narcissism and earnings manipulation. We test the hypothesis that narcissistic leaders over-identify themselves with the organizations they lead and expend considerable effort to achieve their goals, including by engaging in unethical behavior. Earnings announcements are highly anticipated information releases by organizations. They are a key performance indicator used to evaluate the performance of CEOs. This study examines the use of first person singular pronouns by CEOs in response to questions at analyst conferences to measure narcissism. We provide evidence that firms with narcissistic CEOs engage in accruals management to manage earnings positively, highlighting the import effect of CEO personality on accounting choices.
Original languageEnglish
Pages (from-to)210-226
Number of pages17
JournalAbacus
Volume54
Issue number2
Early online date5 Aug 2017
DOIs
Publication statusPublished - Jun 2018

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Keywords

  • personality
  • earnings management
  • narcissism
  • Earnings announcements
  • Chief executive officer

Cite this

Capalbo, F., Frino, A., Lim, M. Y., Mollica, V., & Palumbo, R. (2018). The impact of CEO narcissism on earnings management. Abacus, 54(2), 210-226. https://doi.org/10.1111/abac.12116