The Association between Followers’ Personal Characteristics, Perceptions of CEO Charisma, and Intentions to Comply in Committing Financial Fraud

• In Event: Fraud Research

Abstract

When accounting fraud occurs in an organization, the CEO is usually the focus of scrutiny, yet fraud rarely takes place without the knowledge or collaboration of the CEO’s followers. In a quasi-experimental study with 140 MBA students in the role of followers, we examined whether follower perceptions of, and personal identification with, a narcissistic CEO, and two follower personality traits, were associated with followers’ behavioral intentions to comply with the CEO’s directives to commit financial fraud across four accounting scenarios.

As predicted, followers’ perceptions of the CEO’s charismatic leadership as personalized (socialized) were associated with greater (lesser) intentions to comply. Followers’ personal identification with the CEO was positively associated with compliance intentions. Follower narcissism and proactivity were positively and negatively associated, respectively, with intentions to comply with the CEO, and interacted such that the self-enhancement predicted by follower narcissism amplified the tendency of high (low) proactive followers to resist (comply with) the CEO’s directives to commit financial fraud. Implications for future research and corporate governance are discussed.

Authors

• Eric N Johnson, University of Wyoming

• Linda Achey Kidwell, University of Wyoming

• D. Jordan Lowe, Arizona State University - Tempe

• Philip M J Reckers, Arizona State University - Tempe