Welcome to the Gray Zone: Shades of Honesty and Earnings Management

Lapointe‐Antunes, Pascale; Veenstra, Kevin; Brown, Kareen; Li, Heather

doi:10.1007/s10551-020-04713-z

Cited by 9 publications

(6 citation statements)

References 183 publications

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“…As long as a specific “critical mass” is reached, the mere presence of decision makers from an underrepresented group in the overall decision-making environment may be sufficient to have a noticeable impact on the output of that environment (Kanter 1977a, 1977b). These results are congruent with recent studies on corporate governance linking female CFOs and firm governance (Osma et al , 2022; Lapointe-Antunes et al , 2022). In general, they find that the existence of female CFOs is not spotted by the dominant males.…”

Section: Theoretical Framework and Hypothesis Developmentsupporting

confidence: 91%

Are female CFOs more ethical to the occurrences of financial reporting fraud? Theoretical and empirical evidence from cross-listed firms in the US

Maulidi

Shonhadji²,

Fachruzzaman³

et al. 2022

JFC

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Purpose The purpose of this study is to examine whether female chief financial officers (CFOs) are associated with the occurrences of financial reporting fraud. This study offers new theoretical and empirical evidence on whether firms with more female CFOs are more (less) likely to engage in financial reporting fraud. Design/methodology/approach This study is based on a sample of US-listed firms from 2011 to 2021. The authors speculate that female CFOs play a weaker role in the occurrences of financial reporting fraud. So, firms with a proportional number of female CFOs should be less likely to commit financial reporting fraud. Findings The data provide support for the predictions of this study. This study suggests a negative and significant association between the dummy variables for female CFOs and the occurrences of financial reporting fraud. The authors find that this association is contingent on governance mechanisms [e.g. ownership structure, politically connected CEOs and firms' conditions that do (or do not) invest in a gender-diverse board]. Originality/value This study offers different perspectives on the impact of female CFOs on the occurrences of financial reporting fraud. The results of this study are distinguishable from prior studies. This study moves the analytical focus from the macro level (gender diversity or female corporate leaders) to the micro level (female CFOs) to understand firms' propensity to commit financial reporting fraud. Additionally, this study is based on factual financial reporting fraud cases, considering the US firms' fraud characteristics.

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Section: Theoretical Framework and Hypothesis Developmentsupporting

confidence: 91%

Are female CFOs more ethical to the occurrences of financial reporting fraud? Theoretical and empirical evidence from cross-listed firms in the US

Maulidi

Shonhadji²,

Fachruzzaman³

et al. 2022

JFC

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“…BR and Khoirunisa (2021) find that individuals who have high religiosity are proven to be better able to avoid creating budgetary slack compared to individuals who have low religiosity, when receiving pressure from superiors and peers. Lapointe-Antunes et al (2022) examine the influence of face-based judgments of CFO/CEO honesty on earnings management. The results show that CFOs and CEOs perceived to be less honest engage in higher manipulation in financial reporting.…”

Section: Related Literature and Hypotheses Developmentmentioning

confidence: 99%

The moderating role of financial managers’ honesty-humility on aggressive financial reporting: evidence from Iran

Taki

Soroushyar²

2023

IJOES

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Purpose The purpose of this study is to investigate the moderating role of honesty-humility of financial managers on aggressive financial reporting behavior. Design/methodology/approach To test the research hypotheses, a scenario-based questionnaire taken from Brink et al. (2018) was used. Using a cross-sectional survey design, the authors collected primary data of 160 financial managers of firms in Iran using structured questionnaires. The research sample selected was based on Cohen et al.’s (2000) table. To test the research hypotheses, analysis of variance was used. Findings The results showed that increasing honesty-humility of financial managers decreases the impact of social pressure and risk appetite interaction on aggressive financial reporting. In addition, the results of further analysis showed that reducing the honesty-humility of financial managers increases the impact of risk appetite on aggressive financial reporting. Moreover, the results indicate that reducing the honesty-humility of financial managers increases the impact of social pressure on aggressive financial reporting. Research limitations/implications This finding provides significant evidence for auditor, managers and policymakers in Iran. Policymakers, auditor and company managers can emphasize compliance with the code of ethics, internal control and corporate governance to increase ethics and reduce negative economic consequences. Originality/value To the best of the authors’ knowledge, this is the first case in an emerging economy to survey the moderating role of honesty-humility of financial managers on aggressive financial reporting behavior. Also, this study contributes to understanding how factors at the individual, social and organizational level combine to influence financial managers’ aggressive financial reporting behavior.

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“…In psychology, the five‐factor model, also called the Big Five, is the dominant taxonomy for describing a person's personality in terms of five dimensions: openness, conscientiousness, extraversion, agreeableness, and neuroticism (or the opposite, emotional stability) (Almlund et al 2011; Gow et al 2016). Lee and Ashton (2004) develop the HEXACO model, in which they introduce a sixth factor, “honesty‐humility” (Lapointe‐Antunes et al 2021). Since the Big Five was introduced early in the 1980s and is well established, numerous empirical studies that evaluate executives' personalities continue to use the Big Five.…”

Section: Literature On the Individual Characteristics Of Top Executivesmentioning

confidence: 99%

“…Executives' honesty/humility is generally linked to their ethical behaviors. Lapointe‐Antunes et al (2021) utilize Amazon Mechanical Turk (MTurk) to ask workers to rate CEO/CFO honesty scores on the basis of their Google Images and find that CEOs and CFOs who are perceived to be honest by the raters engage less in earnings management. This supports the fact that honesty‐humility may reduce executives' unethical behaviors.…”

Section: Literature On the Individual Characteristics Of Top Executivesmentioning

confidence: 99%

An Overview of the Literature on Upper Echelons*

Liu¹,

2022

Accounting Perspectives

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This paper reviews the literature pertaining to the effects of the characteristics of top executives on firms' decisions and outcomes. We focus particularly on research related to executives' individual characteristics, including their demographic, psychological, and other characteristics. Thereafter, we discuss the literature related to the relationship among executives, particularly the CEO and the CFO, which may affect corporate performance and accounting outcomes. Finally, we identify the gaps in the literature and provide directions for future research.

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Welcome to the Gray Zone: Shades of Honesty and Earnings Management

Cited by 9 publications

References 183 publications

Are female CFOs more ethical to the occurrences of financial reporting fraud? Theoretical and empirical evidence from cross-listed firms in the US

Are female CFOs more ethical to the occurrences of financial reporting fraud? Theoretical and empirical evidence from cross-listed firms in the US

The moderating role of financial managers’ honesty-humility on aggressive financial reporting: evidence from Iran

An Overview of the Literature on Upper Echelons*

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