Misconduct by Accounting Researchers?

1. Misconduct by Accounting Researchers? Charles D. Bailey School of Accountancy 200 Fogelman College Administration Bldg. The University of Memphis

2. Two points I hope to make • Research misconduct and fraud do exist in accounting academia. • We probably are not “special.” • Many cases in health sciences, hard science • See retractionwatch.wordpress.com • How much? • Who does it? • Evidence of cause and effect (my new study) • Psychopathy as one (of many?) causes

3. Evidence of occurrence in accounting • Engle and Smith (Issues, 1990) found that faculty believedsome colleagues at their own institutions were committing research fraud • 13% believed that “a minority” (6%–39%) of their colleagues falsify data. • Meyer and McMahon (Issues, 2004), surveyed experienced and novice accounting academics concerning perceptionsof the seriousness and prevalence of a wide variety of research and publication practices. • Found belief that moderate degree of fraud exists

4. Self-reports of misconduct • Bailey, Hasselback and Karcher (Abacus, 2001) queried the most prolific accounting researchers (based on 5 or more publication in the “top 30” academic accounting journals), using the randomized-response (RR) technique to ensure confidentiality. • Estimated 4 percent of the respondents’ own research is tainted by serious fraud. • List et al. (2001), using a similar RR method and direct responses, found similarly for economists: • 4.26% of direct respondents and 4.49% of randomized survey respondents have falsified data.

5. Who are the main perpetrators? The RR technique cannot distinguish whether… • a few individuals are admitting that most of their work is fraudulent, or • ...or cheating is spread generally across the population. …but Bailey, Hasselback and Karcher found: • Estimate of self-reported cheating by respondents with • eight or more publications was 5.08%, • five to seven publications was 2.73%. • Difference sig. at p < 0.001

6. Main perpetrators? (continued) Bailey, Hermanson and Louwers (2008) asked about the seriousness of… • …intentionallydelaying a paper to help one’s own competing research program • 3 endowed-chair-holders, active in editorial activities, rated this as “trivial,” and a fourth rated it as being of “little” seriousness. • …rejecting a paper because of a vested interest and rejecting a paper to “get even” with the authors. • These same individuals similarly approved. • Some faculty at lower ranks also approved of such acts, but the concentration of such attitudes among the powerful and successful respondents was striking.

7. My current paper Psychopathy, Academic Accountants’ Attitudes towards Unethical Research Practices, and Publication Success SSRN id=2186902

8. Why study psychopathy? • Business scholars have been slow to embrace the “Dark Triad” of personality factors: • Psychopathy • Callous lack of conscience and empathy • Superficial charm • Machiavellianism • Manipulation of others for own purposes; opportunistic and acting consistent with the economic theory of self-interest. Not without conscience, not a clinical mental disorder. • Murphy, “Attitude, Machiavellianism and the rationalization of misreporting” AOS 2012 • Narcissism • Grandiosity, entitlement, dominance, superiority • Johnson et al., “Auditor perceptions of client narcissism as a • fraud attitude risk factor” Auditing Feb 2013

9. Potential of psychopathy for understanding and preventing a variety of business problems Fraud Antisocial behaviors Unethical behaviors A rare but still potent factor: About 1% of population clinical psychopaths About 4% of CEOs (Babiak et al. 2010) Subclinical psychopathy is measurable

10. What is psychopathy? • Psychopaths are individuals who lack a conscience and lack empathy for others, who therefore will use any means to satisfy their desires (Cleckley 1941, Hare 1993). • Many are successful in business careers (Babiak and Hare 2006; Babiak et al. 2010). • At least two factors: • “Primary” psychopathy is highly conducive to ill-gotten “success.” Reflects selfish, uncaring, and manipulative posture toward others. • “Secondary” psychopathy predisposes one towards violence and incarceration. Reflects impulsivity and a self-defeating lifestyle.

11. How would psychopathy affect propensity to commit fraud? Image from http://internalaudit.wayne.edu

12. Fraud triangle related to research • Opportunity abounds • Private activity, no replications, honesty assumed • Pressure (incentive) is tremendous • Tenure & promotion, mobility, salary, resources (travel, etc.), release from teaching • Rationalization is the only roadblock • Psychopathy obviates the problem • A sufficient, but not necessary condition

13. Model for psychopathy’s effect on publication count Covariates Condemnation of Unethical Practices − − Psychopathy Publication count nil Zhao et al. (2010, 204) and Hayes (2013) show that establishing mediation requires only one test: the bootstrap test of the indirect effect a × b. (Contrary to Baron & Kenny)

14. Hypothesis H1: The indirect effect of psychopathy on publication success, mediated by acceptance of unethical acts, is positive and greater than zero.

15. Design of the study • During October 2012, anonymous survey of all current US/Canadian accounting faculty who have published in the “Top 11” accounting journals since 1990. • http://www.byuaccounting.net/ provides rankings • E-mail request sent them unobtrusively to 12 different web addresses identifying the number of publications • Minimum group size 50 to preserve anonymity • Asked • Demographics (minimal to preserve anonymity) • Attitudes towards unethical/questionable publication practices • Self-report psychopathy scale

16. Response rates by publication count Corrected

17. Descriptive stats of “continuous” variables

18. Interpreting the PSYCHOPATHY scores Glenn et al. (2010) 2157 adult volunteers 26.6 Levenson et al. (1995) 487 univstudents 29.13 McHosleyet al. (1998) l25univ students 33.9 Current sample of accounting academics 22.58 Brinkley et al. (2001) 549 minimum-security state prisoners 32.99 My current sample of 233 accounting majors 28.1.

19. Views of the high-PSYCHOPATHY respondersbased on their agreement with statements “I agree strongly that I tell other people what they want to hear so that they will do what I want them to do. I somewhat agree that making a lot of money is my most important goal, that looking out for myself is my top priority, and that I let others worry about higher values; my main concern is with the bottom line. I disagree somewhat that cheating is not justified because it is unfair to others” (highest-scoring person at 40). “I agree strongly that success is based on survival of the fittest; I am not concerned about the losers. I also agree strongly that looking out for myself is my top priority, and that in today’s world, I feel justified in doing anything I can get away with to succeed. I strongly disagree that I would be upset if my success came at someone else’s expense” (scored 36).

20. Quick Summary of Results • Link a × b (indirect effect) is sig. & positive (p < 0.01) • Link ais sig. & negative (p < 0.0001) • Link bis sig. & negative (p < 0.01) • Link c is NS. a b c

21. Model ************************************************************************** Model = 4 Y = PUBCOUNT X = PSYCHOPATHY M = SEVERITY Statistical Controls: CONTROL= EXPERIENCE DOCTORAL GENDER Sample size 531 ************************************************************************** Output produced by SPSS PROCESS script (Hayes 2012)

22. Regression on SEVERITY of attitudes Only PSYCHOPATHY, not the demographics, drives the SEVERITY attitude. That is good! No confounding with experience.

23. Overall Regression on PUBCOUNT Experience past PhD and employment at DOCTORAL-granting institution are significant covariates. No direct effect of PSYCHOPATHY.

24. Tests of mediation 99% CI No direct effect of PSYCHOPATHY on PUBCOUNT, but indirect effect is > 0 with 99.5% lower CI. Normal theory test is consistent with this.

25. Effect size The effect is small, as most researchers are ethical and low on psychopathy. Good news that accounting academics score lower on psychopathy than samples of students and the general population. Nonetheless, a few motivated and determined individuals can cause substantial damage.

26. Thanks! Comments to cbailey2@memphis.eduwill be appreciated!

27. Questions about ethical behavior

28. …acts by an editor

29. … by a researcher

30. Levenson’s self-report psych.

31. Levenson’s scale cont’d