Investigating the Influence of Managers' Narcissism on Financial Reporting Quality

• Main Authors: Vajihe Bazrafshan, Ameneh Bazrafshan, Mahdi Salehi
• Format: Article
• Language: fas
• Published: University of Tehran 2018-12-01
• Series: بررسی‌های حسابداری و حسابرسی
• Subjects: Narcissism; Earnings Quality; Financial Reporting Quality; Conservatism; Earnings Management
• Online Access: https://acctgrev.ut.ac.ir/article_70210_5287f89dfd28850d2994ec3cac68e9f2.pdf
• ISSN: 2645-8020; 2645-8039

Objective: This research studies the impact of managers' narcissism on financial reporting quality. Theoretically, self-identified managers with behavioral characteristics such as excessive selfishness, the tendency to exploit others to their own needs, mastery of decision-making processes, and lack of feedback from others tend to be fraudulent financial reporting. Methods: To measure narcissism, two proxies are used: area of managers’ signatures and the ratio of managers' remuneration to total annual salary of employees. Three proxies are used to measure the financial reporting quality: earnings management, earnings quality and conservatism. To test the hypotheses, multiple regression is used. The realm of research is from 2009 to 2016. Results: Findings from a survey of 140 companies indicate that there is no significant relationship between managers’ narcissism based on signature size and financial reporting quality. However, the managers’ narcissism based on the managers' remuneration ratio on employee salary has a positive and significant relationship with two of the financial reporting quality proxy (including earnings management and earnings quality). Thus, the managers’ narcissism leads to increase earnings management and reduce earnings quality. Conclusion: The results explain the impact of the managers’ narcissistic phenomenon on the financial reporting quality.