Center for Advanced Management




Prof. Laurence van Lent (Tilburg University)


  • Datum: 29.01.2014
    Zeit: 17:15 - 18:45
    Ort: Schackstr. 4, Raum 307

Testosterone and financial misreporting

We examine the relation between a measure of a CEO’s adolescent exposure to the hormone testosterone and financial misreporting. Testosterone is associated with a complex of behaviors in males, which includes aggression, egocentrism, risk-seeking, and a desire to maintain social status. Using a sample of CEOs from S&P 1500 firms in the period 1996-2010, we document a positive association between our measure of CEO testosterone exposure and financial misreporting. Our primary evidence is based on a sample of financial restatements due to intentional irregularities. Additional analyses are based on misreporting proxies derived from the misstatement-prediction model proposed by Dechow et al. (2011). The positive association between CEO testosterone exposure and financial misreporting is robust to the various misreporting proxies. We show that our measure of testosterone exposure is different from overconfidence, which prior studies have shown to be associated with misreporting. Finally, we demonstrate that testosterone exposure not only correlates with financial reporting decisions, but also predicts the incidence of option backdating in the sample.