Machiavellianism, Idealism, Relativism, Fraudulent financial reporting.

Abstract

Objective: Personality and ethical characteristics have a significant impact on the professional behaviors. Financial reporting is also a part of the accounting profession and shows firms financial position and performance during of a financial period. The aim of this study is to identify the relationship between Machiavellianism and ethical orientation on fraudulent financial reporting. Methods: The research data is collected from 234 financial managers and auditors of listed companies in the Tehran Stock Exchange and analyzed by structural equation modeling using LISREL software. Results: Given to significant manipulation in net income, the Machiavellianism has positive and significant effect on fraudulent financial reporting, the idealism has no significant effect and relativism has indirect and significant effect on the tendency to fraudulent financial reporting. Similarly, given to insignificant manipulation in net income, the same results were obtained. However, the relativism did not have a significant effect on fraudulent financial reporting. Also, our findings show that the Machiavellianism has a direct and significant effect on both idealism and relativism. Conclusion: The evidence of this study confirm that cognition and ethical characteristics could boost opportunistic behavior in fraudulent financial reporting. Hence, accountants and auditors should improve their ethical values in order to enhance quality of financial reporting.

Keywords

• machiavellianism
• idealism
• relativism
• fraudulent financial reporting