- August 13, 2021
If company executives spend too much time, say, on themselves, they could be narcissists, and auditors have found a correlation between narcissism in corporate leaders and fraud, according to a study by a USF assistant professor and other academics.
Auditors found that narcissistic leaders tend to take more risks, says Randy Kuhn, an assistant professor of accounting at the University of South Florida. He authored the report with faculty members from Indiana University, the University of Wyoming, and West Virginia University. The study, “The Impact of Client Attitude on Fraud Risk Assessment,” is published in the current issue of "Auditing: A Journal of Theory and Practice."
“Auditors do make that conscious relationship between a narcissistic type of person and fraud,” says Kuhn in a statement. “Evidence shows those type of individuals believe they're above the law.”
The study's authors undertook an experiment with 101 auditors from an international public accounting firm in which the auditors assessed fraud risk based on manager narcissism. The results showed that narcissistic client behavior and fraud motivation were significantly related to the auditors' fraud risk assessments, according to the research summary.
Kuhn has firsthand experience in examining fraud. As an auditor for KPMG in 2003, he lived in a hotel for a year while investigating the WorldCom fraud, the largest single financial reporting fraud in U.S. history.