Accounting and Information Assurance
Unveiling the “Dark” Side of Business
Mar 04, 2021

Unveiling the “Dark” Side of Business

Research Reveals Some Companies Hire Unethical Bosses On Purpose

Mar 04, 2021
Accounting and Information Assurance
As Featured In 
Journal of Business Ethics

Companies could be hiring that bad boss on purpose. According to new research from Maryland Smith’s Nick Seybert, the “dark” personality traits – questionable ethical standards, narcissistic tendencies – that make a boss bad also make that person much more likely to go along with manipulating earnings, and may be the reason they got the job in the first place.

Seybert worked with Ling Harris of the University of Nebraska-Lincoln, Scott Jackson of the University of South Carolina and Joel Owens of Portland State University for the research, forthcoming the Journal of Business Ethics. They studied the process of hiring executive management accounting candidates and its relation to the company’s earnings management practices – that is, a company's tendency to inflate its income. Through several studies, they found that when a company needed to report earnings aggressively, experienced executives and recruiters tended to recommend hiring candidates with dark personality traits over candidates who sought input from others and believed in strong ethical foundations.

“Dark personality traits are often framed as an accidental byproduct of selecting managers who fit the stereotype of a strong leader,” says Seybert, an accounting professor. “However, our research found that this is often no accident.”

The research involved three experiments in which different actions were measured. In one experiment, for example, the participants were specifically asked to rate the candidates based on dimensions such as the candidate’s ability to manage people and relationships. The only dimension in which candidates with dark personalities were rated higher than their counterparts was in manipulation of ethical boundaries.

“A lot of people assume that these managers must have great self-presentation, promotion, people skills, or confidence” Seybert says. “But our research shows otherwise.”

The basic idea behind this research is that these dark personalities can fulfill a specific nefarious purpose, says Seybert. When companies feel as though they need to inflate their earnings, people with dark personalities are more likely to get placed into positions of power to do exactly that. This results in candidates with potentially better management, organizational, and people skills being passed over for management jobs.

Seybert and his colleagues’ research is unique in that they recruited experienced executives and executive recruiters to evaluate the candidates in order to simulate the real business hiring environment.

“Very, very few prior studies involved people who have experience recruiting for prior jobs,” says Seybert. “Our research involved a lot of time-consuming and creative searching to find the right participants.”

Overall, Seybert hopes that this research will help candidates better evaluate companies during their job search.

“The best takeaway for employees is to avoid companies that might have use for managers with dark personalities, and not to expect support from higher-ups when this is the case. The company might have picked a bad boss on purpose.”

Read the full research, "Recruiting Dark Personalities for Earnings Management," in the Journal of Business Ethics.

 

About the Author(s)

Nick Seybert

Nick Seybert received his M.S. and Ph.D. from the Johnson Graduate School of Management at Cornell University. He conducts experimental and archival research in financial accounting with a focus on manager personality traits as well as on investors’ and managers’ decision-making biases. His research has been published in leading journals, including the Accounting Review, Journal of Accounting Research, Management Science, Review of Accounting Studies, and Accounting, Organizations and Society. Prior to joining the Smith School, he was a faculty member at the University of Texas at Austin’s McCombs School of Business.

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