When Ego Helps: How Narcissistic Auditors Improve Financial Reports

Abstract

This study examines how auditor narcissism associates with financial reporting quality using Pakistani non-financial firms from period between 2017-2021. We measure narcissism through audit partner signature size relative to name length. Financial reporting quality is assessed using discretionary accruals from the modified Jones (1991) and Kothari (2005) models. Results show that narcissistic auditors improve financial reporting quality. Unlike typical leadership contexts, narcissistic auditors display greater independence and reduce earnings management. This occurs because Pakistan's weak regulatory framework makes individual auditor traits more important for audit effectiveness. The findings challenge common views about narcissism in professional settings. In emerging markets with limited enforcement, narcissistic traits may enhance audit vigilance rather than harm it. This has practical implications for audit firms and regulators who should consider personality factors alongside technical skills.