Fraud and corporate psychopaths: The proposition for reintroducing personality traits of the economic crime offender

Abstract

There is strong evidence that corporate psychopaths – ruthless people who willingly engage in fraud and even enjoy outwitting and stealing from others – are a dominant force at senior levels in financial organizations. While corporate psychopathy has obvious implications for fraud and causes significant societal harm (both financial and non-financial), its correlation with fraud has had minimal coverage in both the academic accountancy literature and counter-fraud literature. This paper fills this gap by discussing the presence of corporate psychopaths in organizations as a theoretical antecedent to fraud. The paper outlines what are the most common personality traits of corporate psychopaths and how they might be correlated with fraud. By introducing the concept of corporate psychopath into the counter-fraud discourse, this paper aims to enrich criminological perspectives on personality of economic crime offenders for effective prevention and policing. The paper notes the systemic influence that leaders with personality disorders, like psychopathy, may have on the ethical climate of an organization and concludes that further empirical research on the links between corporate psychopaths and fraud is needed. Eight specific research propositions are suggested.