The Association between Follower Personal Characteristics and Intended Compliance with Leader Directives to Commit Financial Statement Fraud

• In Event: Fraud and Accounting Behavior

Abstract

The role of followers in financial fraud has not been widely examined, even though these frauds typically involve collusion between followers and the CEO. In a study with 140 MBA students in the role of followers, we examined whether two follower personality traits were associated with behavioral intentions to comply with a destructively narcissistic CEO’s directives to commit financial fraud. These traits are 1) proactivity, which is linked with motivations to challenge the status quo and effect environmental change, and 2) self-sacrificing self-enhancement (SSSE), a form of narcissism represented by self-serving impression management.

As predicted, follower proactivity was negatively associated with intentions to comply with the CEO’s directives to commit financial fraud. Also as predicted, follower narcissism interacted with proactivity such that self-serving impression management associated with high follower narcissism amplified the tendency of high (low) proactive followers to resist (comply with) the CEO’s demands. 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

• Philip M J Reckers, Arizona State University