The Effect of Narcissistic Managers on Internal and External Social Performance With a Moderating Role of Overconfidence

Subject Areas : Financial and Behavioral Researches in Accounting

nazanin bashirimanesh ¹ , seyyed hesam vaghfi ² , kobra shamsodinin ³

1 - Assistant Profesor. Faculty of management, economic& accounting, PNU University, Tehran, Iran.
2 - , Assistant Profesor. Faculty of management, economic& accounting, PNU University, Tehran, Iran.
3 - MSc. Student in Accounting, Economic & Accounting, PNU University, Shahr Rey, Iran

Received: 2021-12-04 Accepted : 2022-02-04 Published : 2022-05-22

Keywords: Social Performance, Managers' Overconfidence, managers 'narcissism,

Abstract :

The narcissistic managers try to be active and active in the field of social activities in order to gain fame and magnification, and in this way, they cover their weaknesses and gain more benefits. On the other hand, narcissistic managers are more likely to have overconfidence in their attitudes and abilities. According to this ,The purpose of this study is to investigate the narcissism of managers and internal and external social performance with emphasis on overconfidence. For this purpose, a sample of 129 companies listed on the Tehran Stock Exchange during the years 2014 to 2021 were reviewed. Research hypotheses were tested using combined data and using multiple and Logit regression in Stata and Eviews software. Findings from the test of research hypotheses show that managers 'narcissism has a positive and significant effect on managers' social performance in the internal and external field. Narcissistic managers participate in social activities in order to show off and attract the attention of internal and external stakeholders. The findings also showed that overconfidence has a negative and significant effect on the relationship between managers' narcissism and internal and external social performance. Accordingly, managers' false self-confidence reduces the positive effect of managerial narcissism on social performance.

References:

Aflatooni, A. (2016). The Effect of Earnings Management on the Performance of Accounting Earnings-Based on Valuation Models. Empirical Studies in Financial Accounting, 13(50), 185-203. (In Persian).

Ahmed, A. S., & Duellman, S.(2013). Managerial Overconfidence and Accounting Conservatism. Journal of Accounting Research. 51(1),1-30.

Akbari, M., Ghasemi Shams, M., Hooshmand, F. (2016). Investigating the Impact of Managers' Overconfidence on Social Responsibility (Case Study of Tehran Stock Exchange Listed Companies).Transformation Management Journal, 8(15), 107-130 (In Persian).

Ahn, J. S., Assaf, A. G., Josiassen, A., Baker, M. A., Lee, S., Kock, F., & Tsionas, M. G. (2020). Narcissistic CEOs and Corporate Social Responsibility: Does the Role of an Outside Board of Directors Matter? International Journal of Hospitality Management, 85, [102350].

Bani-Mahd, Bahman, Mehdi Arabi and Shiva Hassanpour, (2016), Experimental research and methodology in accounting, Tehran, Termeh Publications. (In Persian).

Barth, M. E., Konchitchki, Y., & Landsman, W. R. (2013). Cost of capital and earnings transparency. Journal of accounting and Economics, 55(2-3), 206-224.

Campbell, W.K. and Campbell, S.M. (2009) On the Self-Regulatory Dynamics Created by the Peculiar Benefits and Costs of Narcissism: A Contextual Reinforcement Model and Examination of Leadership. Self and Identity, 8(2),214-232.

Chatterjee, A. and D.C. Hambrick. (2007). It’s All about Me: Narcissistic Chief Executive Officers and Their Effects on Company Strategy and Performance, Administrative Science Quarterly, 52, 351-386.

Chen, J., Zhang, Z. & Jia, M. (2021). How CEO narcissism affects corporate social responsibility choice?. Asia Pacific Journal of Management.,38(3), 897-924

Dadash Aghcheh Kand, Samira and Jahangirnia, Hossein. (2019). Overconfidence of Managers and Social Responsibility, 2nd International Conference on New Developments in Management, Economics and Accounting, Tehran. (In Persian).

Ernawan,K and Daniel, D.R(2019). The Influence of CEO Narcissism on Corporate Social Responsibility Disclosure. Journal Akuntansi. 23(2), 253-268.

Foster, J. D.; Reidy, D. E.; Misra, T. A. and J. S.Goff. (2011). Narcissism and Stock Market Investing: Correlates and Consequences of Cocksure Investing. Personality and Individual Differences, 50(6), 816-821.

Freeman, R.E. (1984). Strategic Management: A Stakeholder Approach. Pitman
Publishing Inc. Cambridge University Press.pp. 276.

Frino, A.; Lim, M. Y.; Mollica, V.; and R. Palumbo.(2015). CEO Narcissism and Earnings Management.working paper: https://papers.ssrn.com

Gholipor, A., Khanifar, H., Fakheri Koozeh kanan, S. (2009). Effects of manager’s narcissism on organizational disturbance. Organizational Culture Management, 6(18), 79-93  (In Persian).

Gervais, S.; Heaton, J., & Odean, T. (2011). Overconfidence, compensation contracts and capital budgeting, The Journal of Finance, 66(5), 1735-1777.

Ghafourian Shagardi A., Jahanshiri R., Ghafourian Shagardi M. s. Nagavi M. J. (1398). Investigating the effect of company growth opportunity on the relationship between CEO mistrust and abnormal returns in companies listed on the Tehran Stock Exchange. Journal of New Research Approaches in Management and Accounting, 3(20), 1-14  (In Persian).

Ham, C., Lang, M., Seybert, N., & Wang, S. (2017). CFO narcissism and financial reporting quality. Journal of Accounting Research, 55(5), 1089-1135.

Heaton, J, (2002), "Managerial Optimism and Corporate Finance", Financial Management, 31(2), 33– 45.

Hirshleifer, D. (2001) “Investor Psychology and Asset Pricing”. Journal of Finance, 56(4), 1533-1597.

Hsieh, Tien-Shih and Bedard, Jean C. and Zehms, Karla M., (2014). CEO Overconfidence and Earnings Management .Journal of Business Finance and Accounting, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2495957

Khajavi, S., Dehghani Sa'di, A., Gerami Shirazi, F. (2017). CEO narcissism impacts on earnings management and financial performance. Journal of Accounting Advances, 8(2), 123-149 (In Persian).

Kim,Bora., Lee,Seok.,Kyung ,Ho Kang .(2018).The moderating role of CEO narcissism on the relationship between uncertainty avoidance and CSR. Tourism Management.(67), 203-213

Kim,Y. Haidan,L.Siqi,L.(2014).Corporate social responsibility and stock price crash risk. Journal of Banking & Finance, 43,1-13

Khajavi, S., Dehghani Saadi, A., Roosta, M. (2018). Investigation the Moderating Role of CEO Narcissism on Explaining the Relationship between Corporate Social Responsibility and Financial Performance of Listed Companies of Tehran Stock Exchange. Accounting and Auditing Research, 10(39), 57-74  (In Persian).

Jafari,B., Alikhani. M., Marjori.M, &Pourali.M. R. (2022). The moderating role of manager's narcissism on the relationship between environmental uncertainty and CSR. Journal of Management Accounting and Auditing Knowledge, 9(35), 263-272  (In Persian).

MarwanAl-Shammari , AbdulRasheed,Hussam A.Al-Shammari (2020). CEO narcissism and corporate social responsibility: does CEO narcissism affect CSR focus? Journal of business research,104,160-117

Mathews, M.R. (1997), Twenty‐five years of social and environmental accounting research: Is there a silver jubilee to celebrate?, Accounting, Auditing & Accountability Journal, 10 (4), 481-531

Mollaei Zoleh, Ali, Noorullahzadeh, Nowruz, Jafari, Seyedeh Mahboubeh, Darabi, Roya. (2020). Investigating the relationship between corporate social responsibility and managers' rewards with bold tax reporting. Financial Economics, 14 (52), 101-128  (In Persian).

Molina.M (2010)“ The Corporate Role in a Changing Society: A Model of Sensemaking and of Firm Characterization” , PHD Thesis, Business School, Universitat Ramon Llull

Mashayekh, S., habibzade, M., hasanzadeh kuchou, M. (2021). the effect of manager’s narcissism on voluntary disclosure of company information. Accounting and Auditing Review, , 27(4),617-649  (In Persian).

Mansourzare, M., Banimahd, B., Vakilifard, H., Rahnamaye roodposhti, F. (2020). Narcissism and Tendency to Earnings Management. Empirical Research in Accounting, 10(4), 1-24  (In Persian).

Namazi, M., Dehghani Saad, A., Ghoohestani, S. (2017). CEO Narcissism and Business Strategy. Journal of Management Accounting and Auditing Knowledge, 6(22), 37-52  (In Persian).

Olsen, K. J., & Stekelberg, J. (2016). CEO narcissism and corporate tax sheltering. The journal of the American taxation association, 38(1), 1-22.

Olsen, K. J., Dworkis, K. K., & Young, S. M. (2014). CEO narcissism and accounting: A picture of profits. Journal of management accounting research, 26(2), 243-267.

O'Reilly III, C. A., Doerr, B., Caldwell, D. F., & Chatman, J. A. (2014). Narcissistic CEOs and executive compensation. The Leadership Quarterly, 25(2), 218-231.

Petrenko, O. V., Aime, F., Ridge, J., & Hill, A. (2016). Corporate social responsibility or CEO narcissism? CSR motivations and organizational performance. Strategic Management Journal, 37(2), 262-279.

Pompian, M. M. (2011). Behavioral finance and wealth management: how to build investment strategies that account for investor biases. John Wiley & Sons.

Rashid,W. E., Nordin, M. S., Omar, A., & Ismail, I. (2012).Work/family conflict: The link between self-esteem and satisfaction outcomes. Procedia-Social and Behavioral Sciences, 65(3), 564–569.

rashidi baqhi, M. (2019). The role of audit quality and the quality of accounting information in changing the information asymmetry pricing. Financial Accounting Knowledge, 6(3),167-187. (In Persian).

Raskin, R., & Terry, H. (1988). A principal-components analysis of the Narcissistic Personality Inventory and further evidence of its construct validity. Journal of Personality and Social Psychology, 54(5), 890–902.

Shahsavari, M., Salmani, R. (2018). Evaluate the Economic Consequences of the Social Responsibility of Firms (With Emphasis on Investment Efficiency). Journal of Investment Knowledge, 7(27), 225-240  (In Persian).

Salhi, Bassem. (2021). The Relationship between CEO Psychological Biases, Corporate Governance and Corporate Social Responsibility. Journal of Risk and Financial Management 14, 317.

Saboohi،N ، Mohamadzadeh، A (2018). Investigating the relationship between social performance, ownership structure and corporate governance .Financial Accounting Knowledge, 5(1), 127-151  (In Persian).

Schrand, C. M., & Zechman, S. L. (2012). Executive overconfidence and the slippery slope to financial misreporting. Journal of accounting and Economics, 53(1-2), 311-329.

Saeedi, Ali; Farhanian, Seyed Mohammad Javad(2011).Fundamentals of Behavioral Economics and Finance, second edition. Tehran. Burs Publications  (In Persian).

Taheri Abed, Reza, Ali Nejad Saro Kalaei, Mehdi, Faghani Makrani, Khosrow. (2020). The effect of CEO narcissism on financial reporting transparency. Financial Accounting and Auditing Research, 12 (48), 71-94  (In Persian).

Wesner, B. S. (2007). Responding to the workplace Narcissist. Accepted by the Faculty of Indiana University, in partial fulfillment of the requirements for the degree of Master of Arts.1-59.