The Impact of Psychological Dimensions of Financial anagers on Financial Reporting Quality

Document Type : Original Article

Authors

• Mohamadreza Khodabakhshian Naeni ¹
• Mehdi Arab Salehi ²
• Hasan Khoshakhlagh ³
• Ahmadreza Jamshidian ⁴

¹ Department of Accounting, Isfahan (Khorasgan Branch), Islamic Azad University, Isfahan, Iran

² Department of Accounting, University of Isfahan, Isfahan, Iran

³ Department of Psychology, Nain Branch, Islamic Azad University, Nain, Iran

⁴ Isfahan Technical and Vocational University, Isfahan, Iran

10.22067/ijaaf.2022.41542

Abstract

One of the main and most important sources of information for decision makers, especially external users, is the reports and financial statements of companies. Therefore, the purpose of this study is to determine the personality traits affecting the financial reporting of managers and companies listed on the Tehran Stock Exchange.

For this purpose, a sample consisting of companies listed on the Tehran Stock Exchange in the period from 2014 to the end of 2018 was selected. After studying the theoretical foundations of research topics and formulate research hypotheses, collect and prepare data sets used by researchers and eventually hypotheses using structural equation modeling approach tested and analyzed.

The results show that personality traits have a significant effect on the financial reporting of managers and companies listed on the Tehran Stock Exchange. thus Investors as well as the board of directors of companies are advised to consider the personality traits and components of financial intelligence of the person or persons in question at an acceptable level in selecting financial managers.

Keywords

• Personality types
• Financial reporting quality
• Financial managers

Main Subjects

• Accounting

---

©2022 The author(s). This is an open access article distributed under Creative Commons Attribution 4.0 International License (CC BY 4.0).

References

1. Abdul Ghadir, M. (2016). Capital Structure Effect on the Practices of Earnings Management Phenomenon? The Evidence of Listed Firms in Abu Dhabi Securities Exchange MIS Obeidat Asian. Journal of Finance & Accounting, 8 (2), pp. 171-193
2. Amer, F. and Gerkez, M. (2019). Investigating the Role of Self-Conscious Emotions (Pride and Shame) in Ethical Accounting Decisions: A Case Study of PhD and Master of Accounting Students in Gorgan Universities. Value and Behavioral Accounting, 3(6), pp. 197-165. [In Persian]
3. Andersen, J.A. (2000). Intuition in managers. Journal of Managerial Psychology, 15(1), pp. 46-67.
4. Andreou, P.C., Ehrlich, D. and Louca, C. (2013). Managerial Ability and Firm Performance: Evidence from the Global Financial Crisis, In European Financial Management Association, Annual Conference,
5. Ashton, R. H. and Wright, A. (1989). Identifying audit adjustments with attention-directing procedures. The Accounting Review, 64(4), pp. 710-728.
6. Ashton, R. H., Willingham, J. J. and Elliott, R. K. (1987). An empirical analysis of audit delay. Journal of Accounting Research, 25(2), pp. 275-292.
7. Badri, A. and Goodarzi, N. (2015). Behavioral finance, representational bias, and fundamental accounting variables Evidence from the Tehran Stock Exchange. Empirical studies of financial accounting. 11 (34), pp. 75-88. [In Persian]
8. Chen, K.Y., Lin, K.-L. and Zhou, J. (2005). Audit quality and earnings management for Taiwan IPO firms. Manage. Audit. Journal. 20 (1), pp. 86–104.
9. Darabi, R. and Zarei, A. (2017). The effect of management overconfidence on the risk of falling stock prices with an emphasis on the moderating role of accounting conservatism. Knowledge of Financial Accounting, 4(1), pp. 121-139. [In Persian]
10. Davidson, R. A. and Neo, D. (1993). A note on association between audit firm size and audit quality. Contemporary Accounting Research, 9(2), pp. 479- 488. https://doi.org/10.1111/j.1911-3846.1993.tb00893.x.
11. De Bortoli, D., da Costa, N.J., Goulart, M. and Campara, J. (2019). Personality traits and investor profile analysis: A behavioral finance study. PLoS One, 14(3), pp. 1-18. https://doi.org/10.1371/journal.pone.0214062.
12. Duellman, S., Hurwitz, H. and Sun, Y. (2015). Managerial Overconfidence and Audit Fees. Journal of Contemporary Accounting & Economics, 11(2), pp. 148-165.
13. Eid, M. and Larsen, R. J. (2008). Personality and subjective well-being. In M The science of subjective well-being. The Guilford Press, New York, USA.
14. Fornell, C. and Larcker, D. (1981). Evaluating structural equation models with unobservable and measuring error. Journal of marketing research, 18(1), pp.39-50.
15. Garossi Farshi, M., Ghazi Tabatabai, M. and Mehryar, A. H. (2002) Application New Neo personality test and analytical study of its characteristics and factor structure between Students of Iranian universities. Al-Zahra Humanities Quarterly, 11(39), pp.173-198. [In Persian]
16. Heydarpour, F. and Rajabdorri, H. (2017). Relationship between professional ethics and personality traits of investors. Ethics in Science and Technology, 12 (2), pp. 161-164. [In Persian]
17. McCrae, R. R. and P. T. Costa. (1996). Toward a new generation of personality theories: Theoretical contexts for the five-factor model. In J.S. Wiggin (Ed.), The five-factor model of personality, theoretical perspectives. Guilford Press. New York, USA.
18. McCrae, R.R. and Costa, J.R. (1980). Openness to experience and ego level in loevinger'sentce completion test: Dispositional contribution to developmental models of personality. Journal of personality and social psychology, 39(6), pp. 1179-1190.
19. Tambingon, H. N., Yadiati, W. and Kewo, C. L. (2018). Determinant factors influencing the quality of financial reporting local government in Indonesia. International Journal of Economics and Financial Issues, 8(2), pp. 262-268