Investigation of the relationship between the managers narcissism with monitoring costs
Subject Areas :ameneh bazrafshan 1 , ashraf rezaei nasab 2
1 - international university of emam reza
2 - international university of emam reza
Keywords: Audit Fees, Manager Narcissism, Audit risk, Financial non-executive member of the board.,
Abstract :
The present study investigates the relationship between board of directors, CEO and financial non-executive member of the board narcissism with performance monitoring costs. Theoretically, firms with narcissistic manager have a higher risk of inherent risk and control risk Compared to other firms. Therefore, auditors must do additional work to maintain an acceptable level of audit risk when faced with such managers, and ultimately will demand more fees. To measure narcissism is used of the area of managers’ signatures. In this regard, 101 companies listed in Tehran Stock Exchange have been investigated in the period of 8 years during the years 2009-2017. The present research is an applied research in terms of purpose, and in terms of research method, descriptive-correlation is considered. The results of the research show that there is significant relationship between board of directors' narcissism (based on signature size) and audit fees. However, no significant relationship was found between the CEO and the financial non-executive member of the board narcissism with audit fees.
1. حساس یگانه، یحیی، رجبی، روح الله. (1383). عوامل موثر بر قدرت حرفه¬ای حسابرسی مستقل. مطالعات تجربی حسابداری مالی، 2(8)، 55-86.
2. رجبی، حسین. (1395). خودشیفتگی مدیریت در سازمانها. کنفرانس بین¬المللی مدیریت و حسابداری، تهران، ایران.
3. رفيعي، افسانه، حميدي، الهام، مكارم، ناصر. (1393). اصول حسابرسی. سازمان حسابرسی، جلد اول.
4. فرجی قناتی، سعید. (1389). خودشیفتگی مدیران ؛ عامل افول سازمان¬ها و مدیریت آن-ها، ماهنامه اتاق بازرگانی، 515، 13-11.
5. نوین نام، غلامعباس، شکرکن، مهناز، مهرابی زاده هنرمند، حسین. (1380). بررسی رابطه ویژگی¬های شخصیتی و سبک¬های رهبری مدیران. علوم تربیتی و رو انشناسی، 3(3-4)، 106-87.
6. نیک¬بخت، محمدرضا، شعبان زاده، مهدی، کنارکار، امین. (1395). رابطه بین حق-الزحمه حسابرسی و تجربه حسابرس با کیفیت حسابرسی، فصلنامه مطالعات مدیریت و حسابداری، 2 (1)، 208-190.
Beasley, M. (١٩٩٦). An Empirical Analysis of the Relation Between the Board of Director Composition and Financial Statement Fraud. The Accounting Review, 71(4), 443-465.
Beaulieu, P. R. (2001). The effects of judgments of new clients’ integrity upon risk judgments, audit evidence, and fees. Auditing: A Journal of Practice & Theory, 20 (2), 85–99.
Bedard, J.C. & Johnstone, K.M. (2004). Earnings manipulation risk, corporate governance risk, and auditors’ planning and pricing decisions. The Accounting Review, 79 (2), 277-304.
Brown. A. (1997). Narcissism, identity and legitimacy. Academy of management Review, 22, 643-646.
Campbell, W. K., Rudich, E., & Sedikides, C. (2002). Narcissism, self-esteem, and the positivity of self-views: Two portraits of self-love. Personality and Social Psychology Bulletin, 28, 358−368.
Campbell, S. M., Miller, J. D., Lakey, C. E., & Goodie, A. S. (2008). Unpublished data. University of Georgia.
Chatterjee, A., and Hambrick, D. C. (2007). It’s all about me: Narcissistic chief executive officers and their effects on company strategy and performance. Administrative Science Quarterly, 52 (3), 351–386.
Conger, J. A. (2002). Danger of delusion, the qualities that make leaders great can also cause their downfall, success and self-confidence often breed narcissism and a sense of infallibility. Financial Times, Nov, 29.
COSO. (2013). Internal Control – Integrated Framework: Executive summary. www.coso.org.
Fama, E.F. (1980). Agency Problem and the Theory of the Firm. Journal of Political Economy, 88 (2), 288-307.
Fama, E.F. and Jensen, M.C. (1983). Separation of Ownership and Control. Journal of Law and Economics, 26, 301-325.
Faraji G. S. (2010). the narcissism of managers; the decline factor of the organizations and its management. a monthly chamber of commerce, 515, 11-13 [In Persian].
Graham, J. R., Harvey, C. R., & Puri, M. (2013). Managerial attitudes and corporate actions. Journal of Financial Economics, 109 (1), 103-121.
Gul, F. A., Chen, C. J. P., and Tsui, J. S. L. (2003). Discretionary accounting accruals, managers’ incentives, and audit fees. Contemporary Accounting Research, 20 (3), 441-464.
Ham, C., Seybert, N., & Wang, S. (2017). CFO narcissism and financial reporting quality. Review of Accounting Studies (in press).
Hambrick, D. C., and Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy of Management Review, 9 (2), 193–206.
Hambrick, D.C. (2007). Upper echelons theory: An update. Academy of Management Review, 32 (2), 334–343.
Hassas Yeganeh, Y., Rajabi, R. (2004). Factors affecting professional power of independent audit. Empirical Studies in Financial Accounting Quarterly, 2(8), 55-86 [In Persian].
Hogan, C.E. and Wilkins, M.S. (2008). Evidence on the audit risk model: Do auditors increase audit fees in the presence of internal control deficiencies? Contemporary Accounting Research, 25 (1), 219–242.
Jia, Y., van Lent, L., & Zeng, Y. (2014). Masculinity, testosterone, and financial misreporting. Journal of Accounting Research, 52 (5), 1195-1246.
Johnson, E., Kuhn, J.R., Apostolu, B., Hassell, J.M. (2013). Auditor perceptions of client narcissism as a fraud attitude risk factor. A Journal of Practice and Theory, 32(1), 203-219.
Johnson, S., Kolasinski, A., Nordlund, J. (2018). CEO Narcissism, Human Capital, and Firm Value. SSRN Electronic Journal.
Judd, J. S., Olsen, K. J., & Stekelberg, J. M. (2015). CEO Narcissism, Accounting Quality, and External Audit Fees. Working Paper, http://ssrn.com/abstract =2605172.
Judd, J. S., Olsen, K. J., & Stekelberg, J. M. (2017). How do Auditors Respond to CEO Narcissism? Evidence from External Audit Fees. The Accounting Review, 31 (4), 33-52.
Khajavi, SH., Dehghani Sa'di, A., Gerami Shirazi, F. (2016). CEO narcissism impacts on earnings management and financial performance. Journal of Accounting Advances, 8(2), 123-149 [In Persian].
Kizirian, T. G., Mayhew, B. W., and Sneathen Jr, L. D. (2005). The impact of management integrity on audit planning and evidence. Auditing: A Journal of Practice & Theory, 24 (2), 49–67.
Nick Bakht, M., Shabanzade, M., kenarkar, A. (1395). relation between auditor s rights and auditor s experience with audit quality. Journal of Management Studeis and Accounting, 2 (1), 190 – 208 [In Persian].
Novin name, GH., Shekar kan, M., Mehrabi zade Honarmand, H. (2001). The relationship between personality traits and manager leadership styles. Educational Sciences, 3(3-4), 87-106 [In Persian].
Olsen, K. J., Dworkis, K. K., and Young, S. M. (2014). CEO narcissism and accounting: A picture of profits. Journal of Management Accounting Research, 26 (2), 243–267.
Olsen, K. J., and Stekelberg, J. (2016). CEO narcissism and corporate tax sheltering. Journal of the American Taxation Association, 38 (1), 1-22.
Ouimet, G. (2010). Dynamics of narcissistic leadership in organizations: Towards an integrated research model. Journal of Managerial Psychology, 25 (7), 713-726.
O’Reilly III, C.A., Doerr, B., Caldwell, D.F., and Chatman, J.A. (2014). Narcissistic CEOs and executive compensation. The Leadership Quarterly, 25 (2), 218–231.
Rafie, A., Hamidi, E., Makarem, N. (2014). Principle of auditing. audit organiSation, first volume [In Persian].
Rajabi, H. (2016). management narcissism in organizations. International Conference of Management and Accounting, tehran, iran [In Persian].
Rijsenbilt, A., & Commandeur, H. (2013). Narcissus enters the courtroom: CEO narcissism and fraud. Journal of Business Ethics, 117, 413–429.
Schrand, C. M., and Zechman, S. L. C. (2012). Executive overconfidence and the slippery slope to financial misreporting. Journal of Accounting and Economics, 53 (1–2), 311–329.
