The Effect of Management Characteristics on Audit Report Readability

The present study investigates the relationship between management characteristics (managerial entrenchment, CEO narcissism, overconfidence, board effort, real and accrual-based earnings management) and the audit report readability of listed firms. In other words, this paper seeks to answer the question of “whether management characteristics can have a favourable effect on the audit report readability or not.” The multivariate regression model is used for this study. Research hypotheses were also examined using a sample of 1004 observations on the Tehran Stock Exchange during 2012–2018 and by employing multiple regression patterns based on a panel data technique and fixed effects model. The results show a negative and significant relationship between managerial entrenchment and real and accrual-based earnings management and the audit report readability, based on the FOG index, and a positive and significant relationship between management narcissism, CEO overconfidence, and board effort and the audit report readability, based on the FOG index. Moreover, a negative and significant relationship exists between management entrenchment, CEO overconfidence, real and accrual-based earnings management, and audit report readability based on text length and Flesch indices. A positive and significant relationship was evident between CEO narcissism and board effort and audit report readability based on the same indices. Besides, research models were also examined for more confidence using other additional methods, including FE, T + 1, ABB, and GMM, which confirm the study’s preliminary results. Since the present study is the first paper to investigate such a topic in the emergent markets, it provides valuable information about intrinsic and acquisitive characteristics of management for users, analysts, and legal institutions that contribute significantly to financial statement readability.

The Effect of Hexagon Fraud on the Potential Fraud Financial Statements with the Audit Committee as a Moderating Variable

This study aims to obtain empirical evidence of the influence of the six elements of fraud hexagon theory on potential financial statement fraud by involving the audit committee which acts as a moderating variable in the financial statements of state- owned companies listed on the Indonesia Stock Exchange in 2016-2020. Potential financial statement fraud is measured using the f-score model. The research sample was obtained by the purposive sampling technique. Data analysis methods and techniques include descriptive statistics, evaluation of the SEM-PLS model, and hypothesis testing. The results show that financial pressure has a positive effect on potential financial statement fraud, effective monitoring has a negative effect on potential financial statement fraud, while related party transactions, CEO education, CEO narcissism, and political connection do not affect potential financial statement fraud. The role of the audit committee as a moderating variable is only able to weaken the relationship between financial pressure and potential financial statement fraud.

Owner CEO narcissism, international entrepreneurial orientation and post-entry speed of internationalization: an empirical study of exporting SMEs from China

PurposeThis study explores the impact of owner chief executive officers' (CEO) narcissism on the exporting small to medium-sized enterprises' (SMEs) decision-making on the international market expansion speed after their initial entry. Specifically, the authors use the mechanism of firms' international entrepreneurial orientation (IEO) to examine how owner CEO narcissism may influence SMEs' post-entry speed of internationalization (PSI), both directly and indirectly.Design/methodology/approachTo test the hypotheses, the authors draw on data from a two-wave questionnaire and on archival export data from 291 Chinese exporting SMEs in three municipalities and 17 provinces from 2019 to 2020.FindingsThe results support the theoretical predictions that owner CEO narcissism shapes exporting SMEs' decisions on PSI, both directly and indirectly, through the mediation of firm-level IEO.Originality/valueThe study extends emerging research on the role of CEO narcissism in the upper echelons literature into the international marketing (IM) context. It also offers new insights into what drives exporting SMEs' IM decision-making from a psychological microfoundations perspective. Furthermore, the authors theoretically establish and empirically demonstrate the key role of a firm's IEO as a mediator to complement the existing literature's focus on the direct influence of CEO narcissism on firms' internationalization decisions.

Relationships Among CEO Narcissism, Debt Financing and Firm Innovation Performance: Emotion Recognition Using Advanced Artificial Intelligence

Psychological research shows that as the main component of enterprise decision-making, CEOs are not completely rational, cognitive and psychological biases often influence their decision-making process. CEO narcissism has gradually attracted academic attention. Based on upper echelon theory and subconscious theory, this paper uses advanced artificial intelligence technology to quantify CEO narcissism as a kind of emotional intelligence. Taking A-share listed companies in China from 2010 to 2019 as research objects, this paper empirically tests the impact of CEO narcissism on debt financing and innovation performance. The results show that CEO narcissism has a significant positive impact on firm innovation performance. Debt financing plays a mediating role in the relationship between CEO narcissism and firm innovation performance. CEO narcissism can have a positive impact on firm innovation performance through debt financing. Compared with non-SOEs, SOEs' CEO narcissism has a more significant positive effect on debt financing and enterprise innovation performance. The research in this paper enriches psychology and organizational management and provides a reference for an enterprise's management decisions and for investors' investment decisions.

Are All Narcissistic CEOs Socially Responsible? An Empirical Investigation of an Inverted U-Shaped Relationship Between CEO Narcissism and Corporate Social Responsibility

We investigate the relationship between CEO narcissism and corporate social responsibility (CSR). We suggest an alternative to the current assumption of a linear relationship between CEO narcissism and CSR. Instead, we propose an inverted U relationship between the two. Although narcissistic CEOs may engage in CSR, we argue that highly narcissistic CEOs may be drawn to actions that would garner greater attention and they may be less inclined to engage in CSR. Based on a sample of Fortune 500 firms during the period 2006–2013, we find support for an inverted U relationship and support for our arguments that CEO power moderates the relationship between CEO narcissism and CSR.