Managers' narcissism, earning quality, and bankruptcy risk

Abstract

Purpose: This study was conducted with the aim of investigating the effect of narcissism in managers on profit quality and bankruptcy risk. Design/methodology/approach: The present study is applied in terms of purpose and is in positive accounting research. The research data were also collected based on information from sample companies selected by the systematic elimination sampling method. Based on this, 177 companies were selected over ten years, from 2012 to 2021. The research data were extracted annually from Rahavard Novin 3 software. After performing calculations in EXCEL software to enter the relations and hypotheses of the research, they were entered into Eviews software .Findings: The results of the research hypotheses test showed that managers' narcissism significantly affects earnings stability, earnings predictability, earnings relevance, earnings timeliness, and bankruptcy risk. We also found that narcissistic managers could have two positive and negative dimensions and the presence of these managers in the organization increases the quality of earnings but also the risk of bankruptcy.Academic contributions: There is a contribution to the development of knowledge related to the effect of managers' narcissism on the profitability and bankruptcy of organizations. Practical contributions: The presence of narcissistic managers in the organization can have two positive and negative dimensions, and narcissistic characteristics may neutralize their creative talent for the organization.