Investigating the Effect of Narcissism of Managers on Stock Price Crash
Subject Areas : Financial Knowledge of Securities AnalysisShokrollah Khajavi 1 , Mohsen Rahmani 2
1 - Associate Professor of Accounting, Shiraz University, Shiraz, Iran
2 - Master student of Islamic Azad University, Khorasgan Branch
Keywords: Testosterone, Cash rewards, Period of falling stock prices, Swing Low to High,
Abstract :
Narcissism is a personality structure which has signs such as the penetration of personal desires, accountability from others and prejudice in cognitive processing. In most cases, narcissistic leaders are seeking big achievement in the company. They are shifted in the direction of implementing bold, operational strategies, and risky business decisions which leading to huge profit or loss at the end of the fiscal year. In this regard, this study examines the effects of narcissism of managers on stock price crash risk of 52 companies listed on the Tehran Stock Exchange during 2010 to 2014. Testosterone hormone and cash bonuses were two indicators which were used to measure narcissism of managers. Stock price crash risk were measured by both down-up volatility index and falling period of stock price were used. The results of the study showed that the testosterone hormone index and executives cash bonuses has a positive effect on down-up volatility index but they have negative effect on falling period of stock price.
* پیرمرادی، فاطمه (1393)، تأثیر بیش اطمینانی مدیریت بر کیفیت سود در شرکتهای پذیرفته شده در بورس اوراق بهادار تهران، پایاننامه کارشناسی ارشد، دانشگاه آزاد اسلامی واحد علوم تحقیقات سیرجان.
* حیدری، مهدی (1393)، تأثیر عامل رفتاری اعتماد به نفس بیش از حد مدیریت بر چسبندگی هزینه: نقش تعدیلی عوامل اقتصادی و عوامل مبتنی برنظریة نمایندگی درآن، بررسیهای حسابداری و حسابرسی، دوره 21، شماره 2، ص 151-172.
* سیادت، سیدعلی و اکرم گودرزی (1384). بررسی رابطه بین جو سازمانی با ویژگی‌های شخصیتی مدیران مدارس متوسطه شهر اصفهان، علوم تربیتی و راونشناسی، 2، 142-125.
* عرب‌صالحی، مهدی، امیری، هادی، کاظمی نوری، سپیده (1393)، بررسی تأثیر اطمینان به نفس بیش از حد مدیران ارشد بر حساسیت سرمایهگذاری جریان‌های نقدی، مجله پژوهش‌های حسابداری مالی، سال ششم، شماره دوم،شماره پیاپی (20) صص:128-115
* عرب‌صالحی، مهدی و مجید هاشمی (1393). تأثیر اطمینان بیش‌ازحد مدیریتی بر اجتناب مالیاتی. بررسیهای حسابداری و حسابرسی، دوره 22، شماره 21، 104-85.
* فلاح شمس لیالستانی؛ میرفیض، قالیباف اصل، حسن و سمیرا سرابی نوبخت (1389) «بررسی اثر تجربه بر ریسکپذیری، بیش اطمینانی و رفتار تودهوار مدیران شرکتهای سرمایهگذاری در بورس اوراق بهادار تهران»، فصلنامه بورس اوراق بهادار، شماره 12، 42-25.
* فروغی، داریوش و پیمان قاسم‌زاده (1394) تاثیر اطمینان بیش از حد مدیریت بر ریسک سقوط قیمت سهام، دانش حسابداری مالی، دوره دوم، شماره 2، 71-55.
* قلیپور، آرین؛ خنیفر، حسین و سمیرا فاخری کوزهکنان (1387). اثرات خودشیفتگی مدیران بر آشفتگی سازمانها، مدیریت فرهنگ سازمانی، 6 (18)، 94-79.
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* نویننام، غلامعباس؛ شکرکن، مهناز و حسین مهرابیزاده‌هنرمند (1380). بررسی رابطه ویژگی‌های شخصیتی و سبکهای رهبری مدیران، علوم تربیتی و روانشناسی، 3 (3-4)، 106-87.
* Andreou, P.C., Antoniou, C., Horton, J., C. Louca (2012). “Corporate Governance and Stock Price Crashes.» Available At URL: Http://Www.Ssrn.Com.
* Andreou, P.C., Antoniou, C., Horton, J., C. Louca (2013). “Corporate Governance and Firm-Specific Stock Price Crashes.»Available At URL: Http://Www.Ssrn.Com.
* Amernic, J. H. and Craig, R. J. (2010). “Accounting as a Facilitator of Extreme Narcissism”, Journal of Business Ethics, 96, 79-93.
* Baccar, A., Ben-Mohamed, E., and A. Bouri (2013). “Managerial Optimism, Overconfidence and Board Characteristics: Toward a New Role of Corporate Governance”, Australian Journal of Basic and Applied Sciences, Vol. 7, No. 7, 287-301.
* Bamber, L.; Jiang, J. and I. Wang (2010). “What’s My Style? The Influence of Top Managers on Voluntary Corporate Financial Disclosure”, The Accounting Review, 85(4), 1131-1162.
* Bradshaw, M. T., Hutton, A. P., Marcus, A. J., H. Tehranian (2010). “Opacity, Crashes, and the Option Smirk Curve.» SSRN library.
* Bushman, B. J. and R. F. Baumeister. (1998). “Threatened Egotism, Narcissism, Self-esteem, and Direct and Displaced Aggression: Does Self-love or Self-hate Lead to Violence?”, Journal of Personality and Social Psychology, 75(1), pp. 219-229.
* Davidson, R. H.; Dey, A.; and A. Smith. (2015). “Executives “Off-The-Job” Behavior, Corporate Culture, and Financial Reporting Risk”. Journal of Financial Economics, 117(1), 5-28.
* Dikolli, S. S.; Mayew, W. J.; and T. D. Steffen. (2012). “Honoring One's Word: CEO Integrity and Accruals Quality”, Available at SSRN: http://ssrn. com/abstract.
* Campbell, T. C., Gallmeyer, M., Johnson, S. A., Rutherford, J., Stanley, B. W. (2011). CEO optimism and forced turnover. Journal of Financial Economics, 101 (3): 695-712.
* Campbell, W. K., and S.M. Campbell. (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, 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, S. (2010). “The Role of Ethical Leadership versus Institutional Constraints: A Simulation Study of Financial Misreporting by CEOs”, Journal of Business Ethics, 93(1), pp. 33-52.
* Chen, F., Hou, Y., Richardson, G., and Ye, M. (2012). Auditor industry expertise and the timeliness and usefulness of litigation loss contingency disclosures. Available atwww.ssrn.com.
* Chen, J., Hong, H. & Stein, J. (2001). Forecasting crashes: Trading volume, past returns, and conditional skewness in stock.
* 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), pp. 816-821.
* Frino, A.; Lim, M. Y.; Mollica, V.; and R. Palumbo. (2015). “CEO Narcissism and Earnings Management”, Working Paper, http://ssrn.com/abstract= 2539555.
* Graham, J. R.; Harvey, C. R.; and M. Puri (2013). “Managerial Attitudes and Corporate Actions”, Journal of Financial Economics, 109 (1), 103-121.
* Judd, J. S; Olsen, K. J.; and J. M. Stekelberg. (2015). “CEO Narcissism, Accounting Quality, and External Audit Fees”, Working Paper, http://ssrn.com/abstract=2605172.
* Jia, Y.; van Lent, L.; and Y. Zeng. (2014). “Masculinity, Testosterone, and Financial Misreporting”. Journal of Accounting Research, 52(5), pp. 1195-1246.
* Hirshleifer, D., Low, A., Teoh, S. H. (2012). Are overconfident CEOs better innovators?. The Journal of Finance, 67 (4): 1457-1498
* Huang, W., Jiang, F., Liu, Z., Zhang, M. (2011). Agency Cost, Top Executives' Overconfidence, And Investment-Cashflow Sensitivity - Evidence From Listed Companies In China. Pacific Basin Finance Journal.
* Hutton, A, Marcus, A.J., and Tehranian, H. 2009. “Opaque Financial Reports, R-square,and Crash Risk, Journal of Financial Economics vol 94,pp 67-86.
* Hribar, P., & H. Yang (2011). “CEO confidence and management earnings forecasting”, working paper, www.ssrn.com.
* Kim, J. B. and L. Zhang (2010). "Does accounting conservatism reduce stock price crash risk? firm-level evidence.» Unpublished working paper. City University of Hong Kong.
* Kim, J. B. B., Wang, Z., & Zhang, L. (2015). CEO overconfidence and stock price crash risk. Available at SSRN 2331189.
* Li, I-Cheng. & Hung, Jung-Hua. (2013). The Moderating Effects of Family Control on the Relation between Managerial Overconfidence and Earnings Management. Review of Pacific Basin Financial Markets and Policies, Vol. 16, No. 2 (2013) 1350010 (33 pages).
* Liu, Y., Taffler, R. ( 2008). Damned Out of Their Own Mouth: CEO Overconfidence in M&A Decision-Making and Its Impact on Firm Performance. Working paper, University of Edinburgh.
* Norberg, P. (2009). “I Don’t Care that People Don’t Like What I Do – Business Codes Viewed as Invisible or Visible Restrictions”, Journal of Business Ethics, 86(2), pp. 211-225.
* Olsen, K. J. and Stekelberg, J. M. (2015). “CEO Narcissism and Corporate Tax Sheltering”, Journal of the American Taxation Association, In-Press.
* Olsen, K. J.; K. K. Dworkis; and S.M. Young. (2014). “CEO Narcissism and Accounting: a picture of profits”, Journal of Management Accounting Research, 26, 243-267.
* Papps, B. P. and R. E. O'Carroll. (1998). “Extremes of Self-Esteem and Narcissism and the Experience and Expression of Anger and Aggression”, Aggressive Behavior, 24(6), pp. 421-438.
* Raskin, R. and H. Terry. (1988). “A Principal-Components Analysis of the Narcissistic Personality Inventory and Further Evidence of Its Construct Validity”, Journal of Personality and Social Psychology, 54, 890-902.
* Rijsenbilt, A. and Commandeur, H. (2013). “Narcissus Enters the Courtroom: CEO Narcissism and Fraud”. Journal of Business Ethics, 117(2), 413-429.
* Scherand, C.M., and Zechman, S.L. (2011). Executive overconfidence and the slippery slope to financial misreporting. Journal of Accounting and Economics, 53: 311–29.
* Tabassum, N.; Kaleem, A.; and Nazir, M. (2013). “Impact of Real Earnings Managementon Subsequent Financial Performance”. Middle-East Journal of Scientific Research, 17 (4), 551-560.
* Wallace, H. M. and R. F. Baumeister (2002). “The Performance of Narcissists Rises and fall with Perceived Opportunity for Glory”, Journal of Personality and Social Psychology, 82(5), pp. 819-834.
* Wong, E. M.; Ormiston, M. E.; and M. P. Haselhuhn. (2011). “A Face Only an Investor Could Love, CEOs’ Facial Structure Predicts Their Firms’ Financial Performance”, Psychological Science, 22(12), pp. 1478-1483.
* Zyglidopoulos, S. C.; Fleming, P. J.; and S. Rothenberg. (2009). “Rationalization, Overcompensation and the Escalation of Corruption in Organizations”, Journal of Business Ethics, 84(1), pp. 65-73
_||_* پیرمرادی، فاطمه (1393)، تأثیر بیش اطمینانی مدیریت بر کیفیت سود در شرکتهای پذیرفته شده در بورس اوراق بهادار تهران، پایاننامه کارشناسی ارشد، دانشگاه آزاد اسلامی واحد علوم تحقیقات سیرجان.
* حیدری، مهدی (1393)، تأثیر عامل رفتاری اعتماد به نفس بیش از حد مدیریت بر چسبندگی هزینه: نقش تعدیلی عوامل اقتصادی و عوامل مبتنی برنظریة نمایندگی درآن، بررسیهای حسابداری و حسابرسی، دوره 21، شماره 2، ص 151-172.
* سیادت، سیدعلی و اکرم گودرزی (1384). بررسی رابطه بین جو سازمانی با ویژگی‌های شخصیتی مدیران مدارس متوسطه شهر اصفهان، علوم تربیتی و راونشناسی، 2، 142-125.
* عرب‌صالحی، مهدی، امیری، هادی، کاظمی نوری، سپیده (1393)، بررسی تأثیر اطمینان به نفس بیش از حد مدیران ارشد بر حساسیت سرمایهگذاری جریان‌های نقدی، مجله پژوهش‌های حسابداری مالی، سال ششم، شماره دوم،شماره پیاپی (20) صص:128-115
* عرب‌صالحی، مهدی و مجید هاشمی (1393). تأثیر اطمینان بیش‌ازحد مدیریتی بر اجتناب مالیاتی. بررسیهای حسابداری و حسابرسی، دوره 22، شماره 21، 104-85.
* فلاح شمس لیالستانی؛ میرفیض، قالیباف اصل، حسن و سمیرا سرابی نوبخت (1389) «بررسی اثر تجربه بر ریسکپذیری، بیش اطمینانی و رفتار تودهوار مدیران شرکتهای سرمایهگذاری در بورس اوراق بهادار تهران»، فصلنامه بورس اوراق بهادار، شماره 12، 42-25.
* فروغی، داریوش و پیمان قاسم‌زاده (1394) تاثیر اطمینان بیش از حد مدیریت بر ریسک سقوط قیمت سهام، دانش حسابداری مالی، دوره دوم، شماره 2، 71-55.
* قلیپور، آرین؛ خنیفر، حسین و سمیرا فاخری کوزهکنان (1387). اثرات خودشیفتگی مدیران بر آشفتگی سازمانها، مدیریت فرهنگ سازمانی، 6 (18)، 94-79.
* کریمی، کیانا و فریدون رهنمای رودپشتی (1394). تورش‌های رفتاری و انگیزه‌های مدیریت سود، فصلنامه دانش حسابداری و حسابرسی مدیریت، 4 (14)، 31-15.
* نویننام، غلامعباس؛ شکرکن، مهناز و حسین مهرابیزاده‌هنرمند (1380). بررسی رابطه ویژگی‌های شخصیتی و سبکهای رهبری مدیران، علوم تربیتی و روانشناسی، 3 (3-4)، 106-87.
* Andreou, P.C., Antoniou, C., Horton, J., C. Louca (2012). “Corporate Governance and Stock Price Crashes.» Available At URL: Http://Www.Ssrn.Com.
* Andreou, P.C., Antoniou, C., Horton, J., C. Louca (2013). “Corporate Governance and Firm-Specific Stock Price Crashes.»Available At URL: Http://Www.Ssrn.Com.
* Amernic, J. H. and Craig, R. J. (2010). “Accounting as a Facilitator of Extreme Narcissism”, Journal of Business Ethics, 96, 79-93.
* Baccar, A., Ben-Mohamed, E., and A. Bouri (2013). “Managerial Optimism, Overconfidence and Board Characteristics: Toward a New Role of Corporate Governance”, Australian Journal of Basic and Applied Sciences, Vol. 7, No. 7, 287-301.
* Bamber, L.; Jiang, J. and I. Wang (2010). “What’s My Style? The Influence of Top Managers on Voluntary Corporate Financial Disclosure”, The Accounting Review, 85(4), 1131-1162.
* Bradshaw, M. T., Hutton, A. P., Marcus, A. J., H. Tehranian (2010). “Opacity, Crashes, and the Option Smirk Curve.» SSRN library.
* Bushman, B. J. and R. F. Baumeister. (1998). “Threatened Egotism, Narcissism, Self-esteem, and Direct and Displaced Aggression: Does Self-love or Self-hate Lead to Violence?”, Journal of Personality and Social Psychology, 75(1), pp. 219-229.
* Davidson, R. H.; Dey, A.; and A. Smith. (2015). “Executives “Off-The-Job” Behavior, Corporate Culture, and Financial Reporting Risk”. Journal of Financial Economics, 117(1), 5-28.
* Dikolli, S. S.; Mayew, W. J.; and T. D. Steffen. (2012). “Honoring One's Word: CEO Integrity and Accruals Quality”, Available at SSRN: http://ssrn. com/abstract.
* Campbell, T. C., Gallmeyer, M., Johnson, S. A., Rutherford, J., Stanley, B. W. (2011). CEO optimism and forced turnover. Journal of Financial Economics, 101 (3): 695-712.
* Campbell, W. K., and S.M. Campbell. (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, 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, S. (2010). “The Role of Ethical Leadership versus Institutional Constraints: A Simulation Study of Financial Misreporting by CEOs”, Journal of Business Ethics, 93(1), pp. 33-52.
* Chen, F., Hou, Y., Richardson, G., and Ye, M. (2012). Auditor industry expertise and the timeliness and usefulness of litigation loss contingency disclosures. Available atwww.ssrn.com.
* Chen, J., Hong, H. & Stein, J. (2001). Forecasting crashes: Trading volume, past returns, and conditional skewness in stock.
* 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), pp. 816-821.
* Frino, A.; Lim, M. Y.; Mollica, V.; and R. Palumbo. (2015). “CEO Narcissism and Earnings Management”, Working Paper, http://ssrn.com/abstract= 2539555.
* Graham, J. R.; Harvey, C. R.; and M. Puri (2013). “Managerial Attitudes and Corporate Actions”, Journal of Financial Economics, 109 (1), 103-121.
* Judd, J. S; Olsen, K. J.; and J. M. Stekelberg. (2015). “CEO Narcissism, Accounting Quality, and External Audit Fees”, Working Paper, http://ssrn.com/abstract=2605172.
* Jia, Y.; van Lent, L.; and Y. Zeng. (2014). “Masculinity, Testosterone, and Financial Misreporting”. Journal of Accounting Research, 52(5), pp. 1195-1246.
* Hirshleifer, D., Low, A., Teoh, S. H. (2012). Are overconfident CEOs better innovators?. The Journal of Finance, 67 (4): 1457-1498
* Huang, W., Jiang, F., Liu, Z., Zhang, M. (2011). Agency Cost, Top Executives' Overconfidence, And Investment-Cashflow Sensitivity - Evidence From Listed Companies In China. Pacific Basin Finance Journal.
* Hutton, A, Marcus, A.J., and Tehranian, H. 2009. “Opaque Financial Reports, R-square,and Crash Risk, Journal of Financial Economics vol 94,pp 67-86.
* Hribar, P., & H. Yang (2011). “CEO confidence and management earnings forecasting”, working paper, www.ssrn.com.
* Kim, J. B. and L. Zhang (2010). "Does accounting conservatism reduce stock price crash risk? firm-level evidence.» Unpublished working paper. City University of Hong Kong.
* Kim, J. B. B., Wang, Z., & Zhang, L. (2015). CEO overconfidence and stock price crash risk. Available at SSRN 2331189.
* Li, I-Cheng. & Hung, Jung-Hua. (2013). The Moderating Effects of Family Control on the Relation between Managerial Overconfidence and Earnings Management. Review of Pacific Basin Financial Markets and Policies, Vol. 16, No. 2 (2013) 1350010 (33 pages).
* Liu, Y., Taffler, R. ( 2008). Damned Out of Their Own Mouth: CEO Overconfidence in M&A Decision-Making and Its Impact on Firm Performance. Working paper, University of Edinburgh.
* Norberg, P. (2009). “I Don’t Care that People Don’t Like What I Do – Business Codes Viewed as Invisible or Visible Restrictions”, Journal of Business Ethics, 86(2), pp. 211-225.
* Olsen, K. J. and Stekelberg, J. M. (2015). “CEO Narcissism and Corporate Tax Sheltering”, Journal of the American Taxation Association, In-Press.
* Olsen, K. J.; K. K. Dworkis; and S.M. Young. (2014). “CEO Narcissism and Accounting: a picture of profits”, Journal of Management Accounting Research, 26, 243-267.
* Papps, B. P. and R. E. O'Carroll. (1998). “Extremes of Self-Esteem and Narcissism and the Experience and Expression of Anger and Aggression”, Aggressive Behavior, 24(6), pp. 421-438.
* Raskin, R. and H. Terry. (1988). “A Principal-Components Analysis of the Narcissistic Personality Inventory and Further Evidence of Its Construct Validity”, Journal of Personality and Social Psychology, 54, 890-902.
* Rijsenbilt, A. and Commandeur, H. (2013). “Narcissus Enters the Courtroom: CEO Narcissism and Fraud”. Journal of Business Ethics, 117(2), 413-429.
* Scherand, C.M., and Zechman, S.L. (2011). Executive overconfidence and the slippery slope to financial misreporting. Journal of Accounting and Economics, 53: 311–29.
* Tabassum, N.; Kaleem, A.; and Nazir, M. (2013). “Impact of Real Earnings Managementon Subsequent Financial Performance”. Middle-East Journal of Scientific Research, 17 (4), 551-560.
* Wallace, H. M. and R. F. Baumeister (2002). “The Performance of Narcissists Rises and fall with Perceived Opportunity for Glory”, Journal of Personality and Social Psychology, 82(5), pp. 819-834.
* Wong, E. M.; Ormiston, M. E.; and M. P. Haselhuhn. (2011). “A Face Only an Investor Could Love, CEOs’ Facial Structure Predicts Their Firms’ Financial Performance”, Psychological Science, 22(12), pp. 1478-1483.
* Zyglidopoulos, S. C.; Fleming, P. J.; and S. Rothenberg. (2009). “Rationalization, Overcompensation and the Escalation of Corruption in Organizations”, Journal of Business Ethics, 84(1), pp. 65-73