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http://ssrn.com/abstract=2265510
 
 

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Testosterone and Financial Misreporting


Yuping Jia


Frankfurt School of Finance and Management

Laurence Van Lent


Tilburg University - CentER for Economic Research and Dept. of Accounting

Yachang Zeng


Tilburg University - Department of Accounting & Accountancy; Tilburg University - Center for Economic Research (CentER)

April 23, 2014


Abstract:     
We examine the relation between a measure of a male CEO’s facial masculinity and financial misreporting. Facial masculinity is associated with a complex of masculine behaviors (including aggression, egocentrism, risk-seeking, and maintenance of social status) in males. One mechanism for this relation assumes that facial structures are associated with testosterone exposure during puberty. We document, in a broad sample of S&P 1500 firms during 1996-2010, a positive association between CEO facial masculinity and Dechow et al. [2011]’s misreporting proxies. We complement this evidence by documenting that CEO facial masculinity predicts his firm’s likelihood of being subject to an SEC enforcement action. We also show that an executive’s facial masculinity is associated with his likelihood of being named as a perpetrator by the SEC. We find that facial masculinity is not a measure of overconfidence. Finally, we demonstrate that facial masculinity also predicts the incidence of insider trading and option backdating.

Number of Pages in PDF File: 95

Keywords: Financial misreporting, neuroendocrinology, testosterone exposure, craniofacial growth, facial structure

JEL Classification: M12, M20, M40, M50, Z00

working papers series


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Date posted: May 16, 2013 ; Last revised: April 24, 2014

Suggested Citation

Jia, Yuping and van Lent, Laurence and Zeng, Yachang, Testosterone and Financial Misreporting (April 23, 2014). Available at SSRN: http://ssrn.com/abstract=2265510 or http://dx.doi.org/10.2139/ssrn.2265510

Contact Information

Yuping Jia
Frankfurt School of Finance and Management ( email )
Sonnemannstraße 9-11
Frankfurt am Main, 60314
Germany
0049 69 154008 839 (Phone)
Laurence Van Lent
Tilburg University - CentER for Economic Research and Dept. of Accounting ( email )
Tilburg School of Economics and Management
P.O. Box 90153
5000 LE Tilburg
Netherlands
+31 13 4668288 (Phone)
+31 13 4668001 (Fax)
HOME PAGE: http://www.tilburguniversity.nl/people/vanlent
Yachang Zeng (Contact Author)
Tilburg University - Department of Accounting & Accountancy ( email )
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
0031134662831 (Phone)
0031134668001 (Fax)
HOME PAGE: http://www.tilburguniversity.edu/webwijs/show/?uid=y.zeng
Tilburg University - Center for Economic Research (CentER) ( email )
P.O. Box 90153
Tilburg, 5000 LE
Netherlands
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References:  126
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