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Literature on psychology highlights four traits that shape an amoral and antisocial personality: Machiavellianism, narcissism, psychopathy and sadism. Together, these personality traits form the Dark Tetrad. In this study, the standard intertemporal utility maximization model is reassessed from the point of view of a representative economic agent endowed with the Dark Tetrad personality traits.

The approach followed in this paper consists of identifying how each of the Dark Tetrad traits might be logically associated with the dynamic utility problem, as well as exploring, in the context of the model, the implications, for consumption and utility, of admitting the presence of such traits in individuals’ personalities.

It is found that, typically, dark personalities penalize consumption growth, even when such traits are interpreted directly and positively contributing to the utility of the agent. It is also found that in economies with two or more interacting agents, the dark traits might have a mutually destructive nature.

Economics is going through a smooth revolution in the direction of becoming an eminently behavioral science. Most of the traditional economic models, based on the idea of the hyper-rational agent, are being replaced or complemented by a different view of the homo-economicus, in which, among other things, personality matters. This paper offers a novel contribution in this direction.

This research aims to investigate the relationship between banks’ financial leverage and economic financial stability, and as a result, the research will discuss the role of earnings management (EM) in this relationship, since managers normally manipulate their financial reports when they show higher financial leverage. It is important to control the financial leverage in Jordanian banks based on the research results. The main objective is to mitigate the bank’s financial leverage risk as much as its relationship with financial stability. Results may be important for investors, managers, regulatory bodies and auditors in Jordan since they help strengthen financial stability in Jordan. Finally, the main objective of this study is to find a solution to maintain stable and real financial economy by finding the effect of higher financial leverage in Jordanian banks of managers’ cosmetic practices. This will be discussed through testing the role of EM of the relationship between firm’s financial leverage and financial stability.

In order for the researchers to analyze data, quantitative methods are processed statistically. Also, the researcher tests research conceptual framework according to the mediation model that was developed by Preacher and Hayes (2004). In Figure (1) of which panel A: determines a direct effect, while panel B: illustrates a mediating design. To construct the sample, the researcher used information extracted from Jordanian annual financial reports that is extracted from Amman Stock Exchange. The population of the study includes all Jordanian banks which are 26 banks, additionally, the period from 2008 to 2018 was used to illustrate data. The reason behind using this period is that to examine the variables relationships for and after 2008 financial crisis and its consequences. The researcher chose 2018 as the end period, that is because it is the year before COVID-19 period which covers 2019–2022, and this period is considered not normal. In comparison with past studies, the researcher used modified Jones Model to measure EM (Valášková et al., 2021; Nopiana and Salvi, 2022; Riahi, 2020; Quddoos et al., 2020; Cho et al., 2012), while financial stability and financial leverage was calculated using total debt/total equity (Nopiana and Salvi, 2022). Finally, financial stability is measured using the financial stability model for banking sector, but not for all economy that is because the banking sector represents 96% of the economy, also this study applied for banking sector. Missing values were replaced using the mean on SPSS. Finally, regression model and F-score, correlation have been examined in the research analysis.

Increased risk on enterprises has an impact on economic financial stability. And the interest rate result shows that Jordan’s central bank boosts interest rates during inflationary periods, increasing the risk to the economy’s financial stability. Furthermore, size has a minimal impact when compared to other variables, and greater business sizes signal more sophisticated transactions and higher leverage, reducing the economy’s financial soundness. Finally, ROA indicates increased bank performance, which contributes to the economy’s financial stability. While EM has a direct negative impact on financial stability, this conclusion is consistent with the researcher’s expectations. Because EM refers to the manipulation of financial report information, including information about financial leverage, manipulation also lowers investor confidence in bank share prices, affecting the stability of the economy’s financial system. It has little influence on the relationship between leverage and economic financial stability.

The implications of this research have been discussed through the research, for example, to maintain economic financial stability, auditors must take care through their role specially when there is higher financial leverage of Jordanian banks. Further, managers must pay attention before manipulating financial information if there is high financial leverage, because this will affect the economic financial stability. Lastly, the most important implication is that the maintenance of economic financial stability, and EM if not discovered for a period of time may show false signaling of economic financial stablity, and suddenly face financial crises.

Understanding the role of EM in the relationship between banks’ financial leverage the economic financial stability, may control many issues like the role of external auditor of reporting about the reliability of financial information (when there is high bank financial leverage, the auditor must exercise professional care and increase his sample to ensure that there are no cosmetic accounting), and when EM is in control, the economy will work smoothly and react normally to the effect of financial leverage of Jordanian banks. And the situation of 2008 crisis will not be repeated (because of the cosmetic practices by American firms for many years since 2008 with hidden cosmetic practices, suddenly, the 2008 crises happened). In conclusion, this discussion is original, since no literature theoretically discussed this issue before which (EM when financial leverage is high) may be applied in practice.

The purpose of the study is to determine the relationship between bank efficiency in terms of corporate governance guidelines and the extent of practice of earnings management (EM).

Archival data of listed private commercial banks of Dhaka Stock Exchange over the period of 2007–2016 relating to corporate governance and earnings management are collected and analyzed using parametric and non-parametric methods (efficiency analysis) and applying panel regression analysis.

The same distribution pattern and have low degree of the correlation (0.248) among them. It is found that private commercial banks of Bangladesh, on average, display efficiency level of 80.84%. The average value of discretionary loan loss provision (i.e. measure of earnings management) is 0.4249 and this indicates the presence of earnings management. The relation between earnings management and efficiency score in both cases of two-step system generalized methods of moments (GMMs) and difference GMM are found to be negative. The negative coefficients (−0.7969 and −0.57) indicate that as the efficiency increases, the practice of earnings management by the private commercial bank reduces. By estimating efficiency based on corporate governance guidelines and detecting the existence of EM, the major contribution of the study is establishing the relationship between bank efficiency based on compliance with corporate governance guidelines and managerial practice of earnings management in Bangladesh. Empirical results of the study have also established the fact that the more efficient the management of the banks are, the less likely it will practice earnings management under the compliance of corporate governance guidelines in Bangladesh.

This research study has some limitations. Only conventional banks are considered for the study, with the exception of Islamic banks. Comparison between conventional banks and Islamic banks could have been done.

Based on the literature study, the effectiveness of corporate governance aligns with decreasing agency conflict, protection of shareholders' interests and restrain management from self-serving activities (i.e. practice of earnings management). The empirical results of the study established these facts. Regulators should give more emphasis on effective implementation of good governance.

To the best of the authors' knowledge, this may be the first to empirically determine the relationship between efficiency estimation based on corporate governance and earnings management in case of listed commercial banks of Bangladesh.