The Impact of Antagonistic Narcissism on Auditor Skepticism with Moderation by Client Financial and ESG Performance

Steven E. Kaszak (), Philip M. J. Reckers () and Alan Reinstein ()
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Steven E. Kaszak: University of North Carolina Wilmington, Department of Accountancy and Business Law, Cameron School of Business
Philip M. J. Reckers: Arizona State University
Alan Reinstein: Wayne State University

Journal of Business Ethics, 2025, vol. 202, issue 3, No 7, 567-586

Abstract: Abstract Capital markets depend on truthful corporate financial reporting. To assure financial statement integrity, auditors serve a critical gatekeeper role between corporations and investors. While public corporations pay audit fees, auditors ultimately serve the public interest and must uphold the highest standards of ethical conduct. To fulfill this public trust, auditors must remain independent of clients and be skeptical of potentially biased reporting. However, despite recent safeguards, research indicates that threats to professional skepticism persist. Drawing from social psychology, we argue that auditors’ antagonistic narcissism contributes to compromised skepticism, as this trait is associated with unethical behavior and diminished concern for others. In a laboratory experiment engaging 154 CPAs, we show that trait antagonistic narcissism undermines auditor skepticism. Specifically, auditors high (low) in antagonistic narcissism are less (more) skeptical of questionable client reporting. We also examine how client-related cues influence judgment. On average, recent poor financial performance increases skepticism, while strong ESG performance decreases it. Additionally, we find auditors high in antagonistic narcissism are least skeptical in the absence of recent poor financial performance and, concurrently, in the presence of strong ESG performance. Auditors low in antagonistic narcissism are most skeptical in the opposite cue combination. Our findings reveal a troubling level of variance in ethics-related skepticism based on personality and contextual cues. This work contributes to research on audit quality and professional ethics by showing how dispositional traits may weaken auditors’ ability to identify and respond to others’ unethical reporting, ultimately compromising their gatekeeping role.

Keywords: Antagonistic narcissism; Professional skepticism; Professional ethics; Halo effects; Fraud red flags (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10551-025-06005-w

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