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Who Follows the Unethical Leader? The Association between Followers' Personal Characteristics and Intentions to Comply in Committing Organizational Fraud

39 Pages Posted: 13 Feb 2017 Last revised: 22 Feb 2017

Eric N. Johnson

University of Wyoming

Linda Kidwell

Nova Southeastern University

D. Jordan Lowe

Arizona State University (ASU)

Philip Reckers

Arizona State University (ASU) - School of Accountancy

Date Written: January 16, 2017

Abstract

The role of followers in financial statement fraud has not been widely examined, even though these frauds typically involve collusion between followers and destructive leaders. In a study with 140 MBA students in the role of followers, we examined whether two follower personality traits were associated with behavioral intentions to comply with the demands of an unethical chief executive officer (CEO) to be complicit in committing financial statement fraud. These personality traits are (1) self-sacrificing self-enhancement (SSSE), a form of mal-adaptive narcissism characterized by seemingly altruistic behaviors that are actually intended to boost self-esteem and (2) proactivity, a trait characterized by behaviors reflecting efforts to positively change one’s environment. As predicted, follower SSSE was positively associated with follower behavioral intentions to comply with CEO pressure to commit fraud, while follower proactivity was negatively associated with fraud compliance intentions. Also, as predicted, follower SSSE interacted with follower proactivity, such that followers high in SSSE and high (low) in proactivity reported greater intentions to resist (comply with) pressure from the unethical CEO to commit fraud compared to low-SSSE followers. Implications for future research and corporate governance are discussed.

Keywords: Unethical Leaders, Susceptible Followers, Self-Sacrificing Self-Enhancement, Proactivity, Financial Statement Fraud

JEL Classification: M41, M49, L20

Suggested Citation

Johnson, Eric N. and Kidwell, Linda and Lowe, D. Jordan and Reckers, Philip, Who Follows the Unethical Leader? The Association between Followers' Personal Characteristics and Intentions to Comply in Committing Organizational Fraud (January 16, 2017). Journal of Business Ethics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2915508

Eric Johnson (Contact Author)

University of Wyoming ( email )

Department of Accounting and Finance
College of Business
Laramie, WY 82071
United States

HOME PAGE: http://www.uwyo.edu/accounting/accounting-faculty-and-staff-directory/Eric%20Johnson.html

Linda Kidwell

Nova Southeastern University ( email )

3301 College Avenue
DCRS
Ft. Lauderdale, FL 33314
United States

D. Lowe

Arizona State University (ASU) ( email )

Farmer Building 440G PO Box 872011
Tempe, AZ 85287
United States

Philip Reckers

Arizona State University (ASU) - School of Accountancy ( email )

Tempe, AZ 85287
United States

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