Dark Triad Managerial Personality and Financial Reporting Manipulation

Martin Mutschmann, Tim Hasso, Matthias Pelster

Research output: Contribution to journalArticleResearchpeer-review

15 Citations (Scopus)
475 Downloads (Pure)

Abstract

We investigate the relationship between the dark triad personality traits (Machiavellianism, narcissism, and psychopathy) of managers and the practice of reporting manipulation using a primary survey of 837 professionals working in accounting and finance departments. We find that (a) managers who exhibit dark personality traits are associated with a higher prevalence of fraudulent accounting practices in their accounting and finance departments and (b) traditional risk management mechanisms are only partially effective in mitigating this effect. Internal audits are effective in curtailing the negative behavior of managers with dark triad traits only if these internal audits are outsourced and performed by independent external personnel but not if they are conducted by internal personnel. This suggests that managers with dark triad traits are able to manipulate other employees quite effectively. Consequently, having external personnel perform the auditing task provides a safeguard against such unethical practices and manipulation. This finding has strong practical implications, as it provides support for outsourcing internal audits rather than keeping them in-house.
Original languageEnglish
Pages (from-to)763-788
Number of pages26
JournalJournal of Business Ethics
Volume181
Issue number3
Early online date6 Oct 2021
DOIs
Publication statusPublished - Dec 2022

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