Investigating the role of theory of planned behavior and Machiavellianism in earnings management intentions

Abstract

Purpose The purpose of this study is to develop and empirically test the earnings management (EM) behavior model to investigate the personal psychological factors that influence individuals’ intentions to engage in EM. Design/methodology/approach Following a review of literature, personal-psychological factors influencing EM intentions were identified within the scope of the theory of planned behavior (TPB) and a dark triad of personality theory. The survey data from 153 MBA students were analyzed using partial least square-structural equation modeling. Findings The results revealed perceived behavior control is significant in influencing individuals’ EM intentions followed by attitude toward behavior and subjective norms. The results, however, do not support the relationship between moral obligation and intentions to engage in EM and also reported a negative relationship between Machiavellianism and individuals’ EM intentions. Practical implications The proposed model will enable organizations to develop focused training programs for managers to reduce EM behavior. It will also help educators in training students to positively shape their ethical behavior and make them more reciprocal toward others and their work environment. Originality/value The study develops the EM behavior model and suggests that TPB and Machiavellianism personality traits provide a useful framework to identify the personal psychological factors influencing individuals’ EM intentions. Further, the empirical testing of the model documents and contributes toward a better understanding of the personal psychological factors significantly influencing individuals’ EM intentions.