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University of Nebraska–Lincoln

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Recruiting Dark Personalities for Earnings Management

Journal(s): Journal of Business Ethics
Published: March 2, 2021
Author(s): Ling L. Harris, Scott B. Jackson, Joel Owens & Nicholas Seybert

General Description
Some companies may intentionally hire managers with “dark personality traits” that are associated with unethical or questionable tendencies. In certain situations where an organization needs to report earnings aggressively, companies may seek to hire candidates who exhibit these dark personality traits over those who have a stronger ethical foundation and may be better qualified for the position.

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Academic Abstract
Prior research indicates that managers’ dark personality traits increase their tendency to engage in disruptive and unethical organizational behaviors including accounting earnings management. Other research suggests that the prevalence of dark personalities in management may represent an accidental byproduct of selecting managers with accompanying desirable attributes that fit the stereotype of a “strong leader.” Our paper posits that organizations may hire some managers who have dark personality traits because their willingness to push ethical boundaries aligns with organizational objectives, particularly in the accounting context where ethical considerations are especially important. Using several validation studies and experiments, we find that experienced executives and recruiting professionals favor hiring a candidate with dark personality traits into an accounting management position over an otherwise better-qualified candidate when the hiring organization faces pressure to manage earnings. Our results help to illuminate why individuals with dark personality traits may effectively compete for high-level accounting positions.

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