The Impact of the CEO's Personal Narcissism on Non-GAAP Earnings

• 成果类型: Article
• 署名作者: Abdel-Meguid, Ahmed; Jennings, Jared N.; Olsen, Kari Joseph; Soliman, Mark T.
• 署名单位: Egyptian Knowledge Bank (EKB); American University Cairo; Washington University (WUSTL); Utah System of Higher Education; Utah Valley University; University of Southern California
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2017-0612
• 发表日期: 2021
• 页码: 1-25
• 关键词: pro forma earnings; predictive-value; UPPER ECHELONS; Managers; analysts; determinants; disclosure; STREET

摘要

Non-GAAP earnings provide managers the flexibility to exclude GAAP items to either produce a more informative performance measure or provide them the ability to opportunistically exclude recurring expenses from non-GAAP earnings. Prior literature examines the use of this form of disclosure at the firm level, although it is ultimately management's decision. We extend prior non-GAAP literature by examining whether the use and quality of non-GAAP earnings is influenced by CEO personality traits, namely, CEO narcissism. We find that narcissistic CEOs are more likely to exclude expenses from non-GAAP earnings and that the magnitude of exclusions is greater. We also find that those non-GAAP exclusions are more persistent and, thus, lower-quality. Our results shed light on the disclosure practice of non-GAAP earnings and show how narcissistic CEOs are more likely to take advantage of the discretion in financial reporting disclosures in order to benefit the firm and themselves.