Jaw-dropping study: Executives who manipulate earnings are hired for their lack of ethics

As a journalist who has interviewed hundreds of top CEOs, I can report that many of them are not overflowing with humanity. Now we may know why: In an eye-opening peek into the business of evil, a new study in the Journal of Business Ethics finds that companies purposely hire people with unsavory personality traits when earnings manipulations are in order.

Researchers from universities in four states conducted a trio of experiments studying executive hiring under various organizational earnings demands. They found that, yes indeed, when companies need to report earnings that stray from reality, no, they don’t hire a CFO with super strong ethical foundations. They hire executives with “dark” personalities that are weak on ethics and strong on narcissistic traits. “Our research found that this is often no accident,” said coauthor Nick Seybert, an accounting professor at the University of Maryland, in a news release.

They also found that these “dark” personality types tend to be one-trick ponies, purposely hired to falsify and evade. The study included a survey of potential candidates’ abilities, and the only category on which dark personalities out-ranked other candidates was ethical boundary manipulations. “A lot of people assume that these managers must have great self-presentation, promotion, people skills, or confidence” noted Seybert. “But our research shows otherwise.”

The researchers emphasize that strong leaders are not naturally mean nor narcissistic. In fact, companies that don’t inflate their earnings also don’t tend to hire dark personalities.

How do you fit into this? The researchers’ advice is to steer clear. “The best takeaway for employees is to avoid companies that might have use for managers with dark personalities, and not to expect support from higher-ups when this is the case,” says Seybert. “The company might have picked a bad boss on purpose.”