The thesis of this research report is that when companies want to bend the rules in reporting earnings, they will hire or promote people into key positions who are comfortable doing just that. The researchers characterize these people as “bad bosses” with “dark personalities” and warn that people reporting to them won’t find a warm response when raising red flags about conduct.
I’m not sure that the experimental design on which this research is based actually provides proof of concept, but the notion of promoting morally flexible people when a company isn’t playing by the rules makes intuitive sense. The notion that people who don’t mind lying might also be abusive as bosses certainly seems plausible.
The researchers are trying to debunk the notion that companies promote people with dark personalities because they have the image of being strong leaders. Instead, their argument is that companies will pass over people with better skills in order to place people who are morally flexible into key positions when they have to twist their financial numbers to meet market or investor expectations.
Of course, a “company” doesn’t misrepresent its financial condition; the executive team does that. So, in the parlance of this article, you have bad bosses promoting bad subordinates into manager positions because these subordinates will go along with what management is doing. People who won’t play don’t get promoted.
Whether proof of anything or not, the article fits well with my worldview. I’ve always said that the foundation of a good working environment is trust. If you can’t trust your boss, you shouldn’t be there.
- Ling L. Harris, Scott B. Jackson, Joel Owens, Nicholas Seybert. Recruiting Dark Personalities for Earnings Management. Journal of Business Ethics, 2021; DOI: 10.1007/s10551-021-04761-z
- University of Maryland. “Firms recruit dark personalities for earnings management.” ScienceDaily. ScienceDaily, 31 March 2021. www.sciencedaily.com/releases/2021/03/210331114620.htm