CFO Narcissism and Financial Reporting Quality

70 Pages Posted: 21 Mar 2015 Last revised: 21 Apr 2017

See all articles by Charles (Chad) Ham

Charles (Chad) Ham

Washington University in St. Louis - John M. Olin Business School

Mark H. Lang

University of North Carolina at Chapel Hill

Nicholas Seybert

University of Maryland - Department of Accounting & Information Assurance

Sean Wang

Southern Methodist University

Multiple version iconThere are 2 versions of this paper

Date Written: April 20, 2017

Abstract

We investigate the effect of CFO narcissism, as measured by signature size, on financial reporting quality. Experimentally, we validate that narcissism predicts misreporting behavior, and that signature size predicts misreporting through its association with narcissism. Empirically, we examine notarized CFO signatures and find CFO narcissism is associated with more earnings management, less timely loss recognition, weaker internal control quality, and a higher probability of restatements. The results are consistent for within-firm comparisons focusing on CFO changes and are robust to controlling for CFO overconfidence and CEO narcissism. The results highlight the importance of CFO characteristics in the domain of financial reporting decisions.

Keywords: CFO, CEO, narcissism, financial reporting, earnings management

JEL Classification: M10, M40, G30

Suggested Citation

Ham, Charles and Lang, Mark H. and Seybert, Nicholas and Wang, Sean, CFO Narcissism and Financial Reporting Quality (April 20, 2017). Journal of Accounting Research, Forthcoming; Robert H. Smith School Research Paper No. RHS 2581157. Available at SSRN: https://ssrn.com/abstract=2581157 or http://dx.doi.org/10.2139/ssrn.2581157

Charles Ham

Washington University in St. Louis - John M. Olin Business School ( email )

One Brookings Drive
Campus Box 1133
St. Louis, MO 63130-4899
United States

Mark H. Lang

University of North Carolina at Chapel Hill ( email )

Kenan-Flagler Business School
McColl Building
Chapel Hill, NC 27599-3490
United States
919-962-1644 (Phone)
919-962-4727 (Fax)

Nicholas Seybert (Contact Author)

University of Maryland - Department of Accounting & Information Assurance ( email )

Robert H. Smith School of Business
College Park, MD 20742-9157
United States

Sean Wang

Southern Methodist University ( email )

P.O. Box 750333
Dallas, TX 75275-0333
United States
2147682858 (Phone)

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