Chief Executive Officer (CEO) Narcissism and Risk of Financial Reporting Fraud with Placing Emphasis on the Roles of Auditors and Audit Committees

Objectives: In neoclassic economy, it is assumed that decision-makers behave intellectually and always pursue the maximization of their own favorability, but results of several investigations show that in order to find answers to financial questions, we have to accept this probability that behaviors...

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Autores principales:	Mosa Bozorgasl, Isaac Behshour, Fereshteh Ahmadi Pak
Formato:	article
Lenguaje:	FA
Publicado:	Shahid Bahonar University of Kerman 2021
Materias:	ceo narcissism risk of fraud auditors' effort auditor specialization and chairmen of audit committees Accounting. Bookkeeping HF5601-5689
Acceso en línea:	https://doaj.org/article/d4e1328082844e5d9b30b12581c05e74
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spelling	oai:doaj.org-article:d4e1328082844e5d9b30b12581c05e742021-11-04T19:57:22ZChief Executive Officer (CEO) Narcissism and Risk of Financial Reporting Fraud with Placing Emphasis on the Roles of Auditors and Audit Committees2008-89142476-292X10.22103/jak.2021.16773.3370https://doaj.org/article/d4e1328082844e5d9b30b12581c05e742021-07-01T00:00:00Zhttps://jak.uk.ac.ir/article_2878_21629b12c2e9c2c28823a038022f44d6.pdfhttps://doaj.org/toc/2008-8914https://doaj.org/toc/2476-292XObjectives: In neoclassic economy, it is assumed that decision-makers behave intellectually and always pursue the maximization of their own favorability, but results of several investigations show that in order to find answers to financial questions, we have to accept this probability that behaviors of decision-makers may not be perfectly intellectual. In other words, personality traits of managers are considered factors being important in making decisions. One of such traits is narcissism. Narcissistic personality is associated with signs or indications of sense of superiority, preoccupation with success vagary, power, aesthetic talents, and belief in being an exceptional and unique person. Narcissistic managers are basically willing to achieve great accomplishments within organisations they take over. They tend to do strategically adventuresome operational activities and risky ventures so that decisions made by them can lead to high amounts of profit/ loss at the end of fiscal periods.Present research was done to examine effects of CEO narcissism on the risk of fraud in financial reporting and the moderating roles the auditors and audit committees play regarding the relationship between CEO narcissism and risk of fraud in financial reporting. On this basis, narcissistic managers seeking to reach the best performance are most likely to perform fraudulent activities because measurement of financial performance, which is considered as reflection of decisions made by managers, is a mechanism for managers to be visible and praised. This can be one of factors manifesting narcissism among managers in order to recognize their honor and magnificence. Method: In order to study the subject, data on 90 companies listed on Tehran Stock Exchange during 2014-2018 was collected by Rah Avard Novin software from financial statements, attached notes and official site of Tehran Stock Exchange to be used to test research hypotheses based on logistic regressions. Findings: Findings of present research showed a significantly positive relationship between CEO narcissism and risk of fraud in financial reporting. Findings also signified some moderating effect for efforts made by auditors and for proficiency of auditors and of audit committees' chairmen on the relationship between CEO narcissism and risk of fraud in financial reporting. Results: As a CEO's personality trait, narcissism may increase likelihood of the risk of fraud in financial reporting. As a part of corporate governance mechanisms, recruitment of diligent and Expert auditors as well as audit committees specialized in finance and accounting can be an obstacle to the fraudulent financial reporting caused by CEO narcissism.Mosa BozorgaslIsaac BehshourFereshteh Ahmadi PakShahid Bahonar University of Kermanarticleceo narcissismrisk of fraudauditors' effortauditor specialization and chairmen of audit committeesAccounting. BookkeepingHF5601-5689FAمجله دانش حسابداری, Vol 12, Iss 2, Pp 139-155 (2021)
institution	DOAJ
collection	DOAJ
language	FA
topic	ceo narcissism risk of fraud auditors' effort auditor specialization and chairmen of audit committees Accounting. Bookkeeping HF5601-5689
spellingShingle	ceo narcissism risk of fraud auditors' effort auditor specialization and chairmen of audit committees Accounting. Bookkeeping HF5601-5689 Mosa Bozorgasl Isaac Behshour Fereshteh Ahmadi Pak Chief Executive Officer (CEO) Narcissism and Risk of Financial Reporting Fraud with Placing Emphasis on the Roles of Auditors and Audit Committees
description	Objectives: In neoclassic economy, it is assumed that decision-makers behave intellectually and always pursue the maximization of their own favorability, but results of several investigations show that in order to find answers to financial questions, we have to accept this probability that behaviors of decision-makers may not be perfectly intellectual. In other words, personality traits of managers are considered factors being important in making decisions. One of such traits is narcissism. Narcissistic personality is associated with signs or indications of sense of superiority, preoccupation with success vagary, power, aesthetic talents, and belief in being an exceptional and unique person. Narcissistic managers are basically willing to achieve great accomplishments within organisations they take over. They tend to do strategically adventuresome operational activities and risky ventures so that decisions made by them can lead to high amounts of profit/ loss at the end of fiscal periods.Present research was done to examine effects of CEO narcissism on the risk of fraud in financial reporting and the moderating roles the auditors and audit committees play regarding the relationship between CEO narcissism and risk of fraud in financial reporting. On this basis, narcissistic managers seeking to reach the best performance are most likely to perform fraudulent activities because measurement of financial performance, which is considered as reflection of decisions made by managers, is a mechanism for managers to be visible and praised. This can be one of factors manifesting narcissism among managers in order to recognize their honor and magnificence. Method: In order to study the subject, data on 90 companies listed on Tehran Stock Exchange during 2014-2018 was collected by Rah Avard Novin software from financial statements, attached notes and official site of Tehran Stock Exchange to be used to test research hypotheses based on logistic regressions. Findings: Findings of present research showed a significantly positive relationship between CEO narcissism and risk of fraud in financial reporting. Findings also signified some moderating effect for efforts made by auditors and for proficiency of auditors and of audit committees' chairmen on the relationship between CEO narcissism and risk of fraud in financial reporting. Results: As a CEO's personality trait, narcissism may increase likelihood of the risk of fraud in financial reporting. As a part of corporate governance mechanisms, recruitment of diligent and Expert auditors as well as audit committees specialized in finance and accounting can be an obstacle to the fraudulent financial reporting caused by CEO narcissism.
format	article
author	Mosa Bozorgasl Isaac Behshour Fereshteh Ahmadi Pak
author_facet	Mosa Bozorgasl Isaac Behshour Fereshteh Ahmadi Pak
author_sort	Mosa Bozorgasl
title	Chief Executive Officer (CEO) Narcissism and Risk of Financial Reporting Fraud with Placing Emphasis on the Roles of Auditors and Audit Committees
title_short	Chief Executive Officer (CEO) Narcissism and Risk of Financial Reporting Fraud with Placing Emphasis on the Roles of Auditors and Audit Committees
title_full	Chief Executive Officer (CEO) Narcissism and Risk of Financial Reporting Fraud with Placing Emphasis on the Roles of Auditors and Audit Committees
title_fullStr	Chief Executive Officer (CEO) Narcissism and Risk of Financial Reporting Fraud with Placing Emphasis on the Roles of Auditors and Audit Committees
title_full_unstemmed	Chief Executive Officer (CEO) Narcissism and Risk of Financial Reporting Fraud with Placing Emphasis on the Roles of Auditors and Audit Committees
title_sort	chief executive officer (ceo) narcissism and risk of financial reporting fraud with placing emphasis on the roles of auditors and audit committees
publisher	Shahid Bahonar University of Kerman
publishDate	2021
url	https://doaj.org/article/d4e1328082844e5d9b30b12581c05e74
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Chief Executive Officer (CEO) Narcissism and Risk of Financial Reporting Fraud with Placing Emphasis on the Roles of Auditors and Audit Committees

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