15th Annual
Symposium on Ethics Research in Accounting
Sponsored by the American Accounting Association’s
Professionalism and Ethics Committee
and the
Public Interest Section
Co-Directors
James C. Lampe, Missouri State University
Diane H. Roberts, University of San Francisco
San Francisco, California
August 1, 2010
ABSTRACT PROCEEDINGS
OF THE
155h Annual
Symposium on Ethics Research in Accounting
EDITED BY
Diane H. Roberts
AUGUST 1, 2010
SAN FRANCISCO, CALIFORNIA
SPONSORED BY
THE PROFESSIONALISM AND ETHICS COMMITTEE OF
THE AMERICAN ACCOUNTING ASSOCIATION
AND
THE PUBLIC INTEREST SECTION OF
THE AMERICAN ACCOUNTING ASSOCIATION
2010 15th Annual Symposium on
TABLE OF CONTENTS
Ethics Research in Accounting
Professionalism & Ethics Committee Members
Preface
List of Reviewers
Program
Abstracts
2009-2010 PROFESSIONALISM & ETHICS COMMITTEE MEMBERS
Committee Chair: John M. Thornton, Washington State University
Executive Committee Liaison: Ira Solomon, University of Illinois UC
Members:
Mohammad Abdolmohammadi, Bentley College
Don Finn, University of North Texas
Philomena Leung, Deakin University
Timothy Pearson, West Virginia University
Diane Roberts, University of San Francisco
John Sennetti, Nova Southeastern University
Murphy Smith, Texas A&M University
2010 Program Directors
James C. Lampe, Missouri State University
Diane H. Roberts, University of San Francisco
2010-2011 PROFESSIONALISM & ETHICS COMMITTEE MEMBERS
Committee Chair: John M. Thornton, Washington State University
Executive Committee Liaison: Ira Solomon, University of Illinois UC
Members:
Mohammad Abdolmohammadi, Bentley College
Andrew Felo, Penn State University—Great Valley
Stephen Loeb, University of Maryland
Timothy Louwers, James Madison University
Diane Roberts, University of San Francisco
Murphy Smith, Texas A&M University
John Sennetti, Nova Southeastern University
Martin Stuebs, Baylor University
2010 REVIEWER LIST
Reviewer Name
Mohammad Abdolmohammadi
Affiliation
Bentley College
Vicky Arnold
University of Central Florida
Larry Brewster
University of San Francisco
Charles D. Bailey
University of Memphis
Christine Cooper
University of Strathclyde
Charles P. Cullinan
Bryant University
Chauncey M. DePree, Jr.
University of Southern Mississippi
Mary S. Doucet
CSU-Bakersfield
Andrew J. Felo
Penn State University—Great Valley
Don W. Finn
University of North Texas
Linda J. Flaming
Monmouth University
Carol Graham
University of San Francisco
John Koeplin
University of San Francisco
Timothy J. Louwers
James Madison University
Dawn W. Massey
Fairfield University
Linda J. Matuszewski
Northern Illinois University
Donald Morris
University of Illinois Springfield
Linda M. Parsons
George Mason University
Bruce Oliver
Rochester Institute of Technology
Robin Radtke
Florida Atlantic University
Robin Romanus
Texas Tech University
Donald P. Samelson
Colorado State University
Gregory Saxton
SUNY Buffalo
John T. Sennetti
Nova Southeastern University
Linda Thorne
York University
Tony Tinker
Baruch College at CUNY
Joan VanHise
Fairfield University
Paul F. Williams
North Carolina State University
George F. Young
Florida Atlantic University
15th Annual
Symposium on Ethics Research in Accounting
PROGRAM
Saturday, July 31, 2010
1:00 PM – 5:00 PM
Registration: AAA Registration Desk in Hilton Hotel
Sunday, August 1, 2010
Symposium at Parc 55 Hotel
Main Room, Cyril Magnin 1, 4th Floor Parc 55
Breakout Room, Stockton, 4th Floor Parc 55
7:00 AM – 7:55 AM
Registration: AAA Registration Desk in Hilton Hotel
8:00 AM – 8:30 AM
Breakfast and Forum Session, Cyril Magnin 1
Paper 1: A PEDAGOGICAL MODEL OF SOCIAL RESPONSIBILITY FOR
ACCOUNTING STUDENTS USING ARISTOTLE’S NICOMACHEAN ETHICS
Authors:
Jay Shinde, Eastern Illinois University
Andrew Youpa, Southern Illinois University
Raymond Wacker, Southern Illinois University
Udaysinha Shinde, Southern Illinois University
Paper 2: ACCOUNTANTS’ WHISTLE-BLOWING INTENTIONS: THE
IMPACT OF RETALIATION, AGE, AND GENDER
Authors:
Gregory Liyanarachchi, Lincoln University
Ralph Adler, University of Otago
Paper 3: INCORPORATING THE IMA CODE OF ETHICS INTO AN
UNDERGRADUATE COST ACCOUNTING COURSE: AN INNOVATIVE
APPROACH
Authors:
Ali Sedaghat, Loyola University of Maryland
Paper 4: THE HISTORY OF PROFESSIONALIZATION IN U.S. PUBLIC
ACCOUNTANCY
Authors:
Andy Garcia, Bowling Green State University
James C. Lampe, Missouri State University
Paper 5: CFO EXPERTISE AND CORPORATE GOVERNANCE
Authors:
Fuad Rakhman, Purdue University at Calumet
Marty Stuebs, Baylor University
Li Sun, Ball State University
Paper 6: NOAH’S ARK AND THE ‘SPACESHIP’ EARTH: TACTICAL
PROFESSIONAL STEERING
Authors:
Jean Raar, Swinburne University
Paper 7: ONE SIZE DOES NOT FIT ALL – DIFFERENT STRATEGIES FOR
TEACHING ACCOUNTING ETHICS
Authors:
Patrick Kelly, Providence College
Dawn Massey, Fairfield University
Joan Van Hise, Fairfield University
Paper 8: ETHICS INSTRUCTION: AN EXTERNAL VALIDATION
Authors:
Mary Jo Billiot, New Mexico State University
David Daniel, New Mexico State University
Sid Glandon, University of Texas at El Paso
Terry Ann Glandon, University of Texas at El Paso
8:30 AM – 8:45 AM
Welcome and Introduction
8:45 AM – 9:45 AM
Concurrent Session 1A: Ethics Education
Moderator: Robin Roberts, University of Central Florida
Paper 1: INTEGRATING LIBERAL EDUCATION WITH BUSINESS AND
ACCOUNTING EDUCATION IN A SENIOR UNDERGRADUATE CAPSTONE
COURSE
Authors:
Brian Shapiro, University of St. Thomas
Michael Naughton, University of St. Thomas
Discussant: John Koeplin, University of San Francisco
Paper 2: ETHICS INTEGRATION THROUGHOUT THE ACCOUNTING
CURRICULUM: HOW MUCH ETHICS COVERAGE OCCURS AND WHAT IS
COVERED?
Authors:
William F. Miller, University of Wisconsin – Eau Claire
D’Arcy A. Becker, University of Wisconsin – Eau Claire
Discussant:
Robin Roberts, University of Central Florida
Concurrent Session 1B: Accounting Codes of Ethics
Moderator: Michael Shaub, Texas A&M University
Paper 1: AN ANALYSIS OF ACCOUNTING AND INTERNAL AUDITING
EDUCATORS’ ETHICS: SURVEY COMPARISONS USING THE INTEGRATIVE
SOCIAL CONTRACTS THEORY
Authors:
Philip H. Siegel, Augusta State University
John O’Shaughnessy, San Francisco State University
Jeffrey R. Miller, Augusta State University
Discussant: Charles Bailey, University of Memphis
Paper 2: THE IMPACT OF CULTURE AND TRAINING ON CODE OF CONDUCT
EFFECTIVENESS: REPORTING OF OBSERVED UNETHICAL BEHAVIOR
Authors:
Mary B. Curtis, University of North Texas
John Williams, University of North Texas
Discussant:
Paul Williams, North Carolina State University
9:45 AM – 10:00 AM
Refreshment Break
10:00 AM – 11:00 AM
Concurrent Session 2A: Ethical Accountability
Moderator: Sue Ravenscroft, Iowa State University
Paper 1: ACCOUNTABILITY IN PRIVATE PRISONS? A CASE STUDY OF
THE EFFECTIVENESS OF DIALOGIC EVALUATION
Authors:
Linda M. English, The University of Sydney
C. Richard Baker, Adelphi University
Discussant: James Lampe, Missouri State University
Paper 2: THE IMPACT OF SOX ON ETHICAL VIOLATIONS BY CPAS
Authors:
Helen L. Brown-Liburd, Rutgers
Barbara M. Porco, Fordham University
Discussant:
Andy Garcia, Bowling Green University
Concurrent Session 2B: Synthesizing Ethical Concepts
Moderator: John Thornton, Washington State University
Paper 1: SYNTHESIZING WISDOM, INTELLIGENCE AND CREATIVITY IN
ACCOUNTING ETHICS
Authors:
Michael K. Shaub, Texas A&M University
Discussant:
Cynthia Jeffrey, Iowa State University
Paper 2: ETHICAL PROMPTS AND THEIR EFFECTS ON THE INDIVIDUAL’S
EVALUATION OF ACCEPTABLE BUSINESS PRACTICES: CONSIDERATIONS
FOR CPAS
Authors:
William H. Black, University of Mississippi
Barbara S. White, University of Mississippi
Discussant: Charlie Cullinan, Bryant University
11:00 AM – Noon
Panel Session:
‘In the public interest’: useful concept or meaningless diversion?
Moderator: Robert Hodgkinson, Executive Director Technical, ICAEW
Panel participants:
•
•
•
•
Jim Gaa: University of Alberta and public member of the IFAC Ethics Standards
Board.
Ross Watts: MIT.
Manuel Ramirez, President California State Board of Accountancy.
Jeff Hoops, Ernst & Young Ethics and Compliance Officer and member of the
Board of Directors and Council AICPA.
Noon – 1:00 PM
Accounting Exemplar Luncheon
Market Street Room, 3rd Floor Parc 55
1:00 PM – 1:15 PM
Break (Possibly Luncheon runs over to 1:15)
1:15 PM – 2:15 PM
Session 3:
Moderator: Diane Roberts, University of San Francisco
Paper 1: AN EMPIRICAL ANALYSIS OF THE ETHICAL REASONING
PROCESS OF TAX PRACTITIONERS
Authors:
Elaine Doyle, University of Limerick
Jane Frecknall Hughes, The Open University Business School
Barbara Summers, Leeds University Business School
Discussant: Diane Roberts, University of San Francisco
Paper 2: CASH-BASED EXECUTIVE INCENTIVE COMPENSATION AND NET
EARNINGS – ANALYSIS IN LIGHT OF THE FINANCIAL CRISIS OF 2008
Authors:
Michael A. Santoro, Rutgers Business School
Ronald J. Strauss, Rutgers Business School
Discussant:
Don Finn, University of North Texas
2:15 PM – 2:30 PM
Refreshment Break
2:30 PM – 4:00 PM Concurrent Session 4A: International Accounting Ethics
Moderator: Don Finn, University of North Texas
Paper 1: A CROSS-CULTURAL STUDY ON ETHICAL DECISION-MAKING OF
ACCOUNTING STUDENTS IN THE U/S/ AND TAIWAN
Authors:
Yi-Hui Ho, Chang Jung Christian University
Chieh-Yu Lin, Chang Jung Christian University
Discussant:
Mike Shaub, Texas A&M University
Paper 2: WHAT INFLUENCES ETHICAL DECISIONS: A COMPARISON OF
BUSINESS STUDENTS IN THE U.S. AND MEXICO
Authors:
Deborah W. Thomas, University of Tulsa
Tracy S. Manly, University of Tulsa
Virginia Kalis, Instituto Tecnologico Autonomo de Mexico (ITAM)
Yanira Petrides, Instituto Tecnologico Autonomo de Mexico (ITAM)
Discussant:
Martin Stuebs, Baylor University
Paper 3: ETHICAL ATTITUDES OF ACCOUNTANTS IN BRAZIL: RECENT
EVIDENCE FROM A STUDENT AND ACCOUNTANTS SURVEY
Authors:
Discussant:
Tatiane Antonovz, Federal University of Parana
Charles Stanley, Baylor University
John Thornton, Washington State University
Concurrent Session 4B: Is Accounting a Profession?
Moderator: Cynthia Jeffrey, Iowa State University
Paper 1: BECOMING WHAT YOU PRETEND TO BE: LARGE ACCOUNTING FIRM
ADVERTISING AND THE DEATH OF PROFESSIONALISM
Authors:
Timothy J. Fogarty, Case Western Reserve University
Discussant:
Andrew Felo, Penn State University – Great Valley
Paper 2: COMMERCIALISM AND UNIVERSITIES: AN ETHICAL ANALYSIS
Authors:
Steven Mintz, Cal Poly San Luis Obispo
Arline Savage, Cal Poly San Luis Obispo
Richard Carter, Cal Poly San Luis Obispo
Discussant:
John Sennetti, Nova Southeastern University
Paper 3: THE HISTORY OF DEPROFESSIONALIZATION IN ACCOUNTANCY IN
THE U.S.
Authors:
James C. Lampe, Missouri State University
Andy Garcia, Bowling Green State University
Discussant:
Stephen Loeb, University of Maryland
4:00 PM – 4:15 PM Cynthia Jeffrey, Editor, Research on Professional
Responsibility and Ethics in Accounting
Concluding Remarks
Forum Paper
PEDAGOGICAL MODEL OF SOCIAL RESPONSIBILITY FOR ACCOUNTING
STUDENTS USING ARISTOTLE’S NICOMACHEAN ETHICS
Jay Shinde, Eastern Illinois University
Andrew Youpa, Southern Illinois University
Raymond Wacker, Southern Illinois University
Udaysinha Shinde, Southern Illinois University
Abstract
Social responsibility is a key issue in today’s public and private accounting firms.
The popularity of social responsibility issues in the “real world” makes it a pertinent
topic in an academic setting. Also, many academicians and practitioners are
pointing to the irrelevance of business education from a standpoint of practicality.
This paper addresses both these issues by constructing a pedagogical model of
social responsibility using the framework of Aristotelian Nicomachean Ethics.
The paper uses both qualitative and quantitative methodology to develop the
pedagogical model. Quantitative tools like factor analysis, scree plots, and
multidimensional scaling are used to develop the pedagogical model. The Seven
Step Process explicated by this study provides a rich philosophical approach for
exploring and teaching the dynamic concept of social responsibility.
Forum Paper
ACCOUNTANTS’ WHISTLE-BLOWING INTENTIONS: THE IMPACT OF
RETALIATION, AGE, AND GENDER
Gregory Liyanarachchi, Lincoln University
Ralph Adler, University of Otago
Abstract
Accounting practices and the role of auditors have been widely implicated in many
corporate scandals. The accountants are likely to witness serious wrongdoings at
their workplace, thus presenting them with a difficult choice of whether or not to
whistle-blow. This study reports results of whistle-blowing intentions of the
members of Certified Practising Accountants of Australia (CPA, Australia). The study
provides data on a well- known obstacle (threat of retaliation) and demographic
factors on accountants’ propensity to blow the whistle (PBW). An online survey was
used to collect data. The data was analysed using a 2x3x2 (retaliation, age and
gender, respectively) between-subject design. The results show a complex
interaction effect of retaliation, participants’ age and gender on their PBW. Among
the early career accountants, male accountants are more likely than female
accountants to blow the whistle. Accountants in the mid-age group are not only
likely to whistle-blow when there is retaliation but tend to be more willing to do so
when that retaliation involves a direct personal loss than a loss to their associates.
Accountants in the age group of 45 years or above, respond to retaliation differently
depending on their gender. Specifically, female accountants’ PBW in this age group
tend to decline as the retaliation threat increases from weak to strong yet the
change in retaliation threat has little impact on male accountants’ PBW. These
results and their implications are discussed.
Forum Paper
INCORPORATING THE IMA CODE OF ETHICS INTO AN UNDERGRADUATE
COST ACCOUNTING COURSE: AN INNOVATIVE APPROACH
Ali M. Sedaghat, Loyola University of Maryland
George Wright, Loyola University of Maryland
Abstract
This paper describes our effort to advance accounting ethics education by
incorporating a code of ethics video produced by the Institute of Management
Accountants into an undergraduate cost accounting course. We used direct and
indirect assessment techniques to measure student learning. By inviting a panel of
outside faculty and two professional accountants into the process as audience, guest
speakers, and evaluators, we enriched students learning and encouraged them to
fully engage in the process. Results show that the experience successfully helped
students absorb the IMA code of ethics. We supply all our instructional tools and
methodologies for faculty who might desire to implement a similar program.
Forum Paper
THE HISTORY OF PROFESSIONALIZATION IN U.S. PUBLIC ACCOUNTANCY
Andy Garcia, Bowling Green State University
James C. Lampe, Missouri State University
Abstract
This paper develops a model of professionalism via a synthesis of three extant
theories from the sociology of the professions literature. Nine components or
conditions of the model are used to trace the historical development of public
accountancy through an Early Era from 1850 to 1929 and a Modern Era from 1930
to the mid-1980s. The conclusion is that concerted efforts over an approximate 130
year period were needed for accountancy to achieve elite professional status in the
eyes of the U.S. public.
Forum Paper
CFO EXPERTISE AND CORPORATE GOVERNANCE
Fuad Rakhman, Purdue University at Calumet
Marty Stuebs, Baylor University
Li Sun, Ball State University
Abstract
Strengthening corporate governance controls to repair and secure public trust in
the wake of mounting corporate financial failures continues to receive attention.
Trusted financial executives with competent expertise in addition to professional
character are a paramount element in governance efforts to improve trust and
confidence. Trusted, effective governance systems are built on trusted, effective
individuals. The purpose of this study is to examine the association between the
financial expertise of Chief Financial Officers (CFOs)—the executives with financial
reporting responsibilities—and corporate governance. Consistent with prior
research, we use four variables to measure three aspects of CFO financial expertise.
First, CFO age and CFO tenure length are measures of CFO experience. Second, we
use an MBA degree as a measure of advanced, post-graduate education. Third, CPA
certification is a measure of professional competence and expertise. We find
significant evidence of a positive link between Kinder, Lydenberg, and Domini’s
(KLD’s) corporate governance measures and CFO experience in our sample of firms
from 2005. In addition, we find that CPA certification is strongly positively
associated with CFO tenure suggesting that CPA certification increases CFO tenure
which improves corporate governance. We also find that only the CPA certification
is strongly associated with all KLD corporate governance measures for Standard &
Poor’s (S&P) Small Cap 600 Index firms in our sample. Our results suggest that the
CPA certification plays an important role in CFO financial expertise. It is directly
associated with CFO tenure which is linked to improved corporate governance, and
shareholders show more confidence in and less concern with a company’s corporate
governance mechanism when the CFO is a CPA in S&P Small Cap firms. In particular,
our results support the recommendation by the American Institute of Certified
Public Accountants (AICPA) that a CFO of a public firm should have a CPA
certification.
Forum Paper
NOAH’S ARK AND THE ‘SPACESHIP’ EARTH: TACTICAL PROFESSIONAL
STEERING
Jean Raar, Swinburne University
Abstract
Considerable dialogue has been generated on accounting and its role in relation to
environmental and social issues. This paper is directed to flow and allocation of
natural resources. The story of Noah’s Ark provides theological re-think of what it
means to do the right thing’ in order that the social consciousness of the profession
critically reflects its expertise in the provision of information for decisions on the
efficient use, allocation and reporting of natural resources. The paper highlights a
community focus and the intrinsic realism that the Earth’s longer term economic
activity depends upon ongoing and sustainable biodiversity.
Forum Paper
FRAMING ETHICAL BEHAVIOR: A CONCEPTUAL DEVELOPMENT
Marilyn Waldron, University of South Australia
Abstract
Although ethics literature addresses a variety of issues to explain the ethical
decision making process, it lacks a comprehensive normative model to explicate the
complexities of the numerous relationships. The present study proposes a
prescriptive conceptual framework for ethical decision making to fill a gap in
literature with the notion to provide a basis for debate. The foundational element of
the present framework places values as central to explaining ethical intention with
antecedents representative of individual factors, while issue contingency,
organization characteristics and ethics training moderate the relationship to explain
ethical intention.
Forum Paper
ONE SIZE DOES NOT FIT ALL – DIFFERENT STRATEGIES FOR TEACHING
ACCOUNTING ETHICS
Patrick Kelly, Providence College
Dawn Massey, Fairfield University
Joan Van Hise, Fairfield University
Abstract
Research suggests accounting students’ ethical reasoning skills can be
improved through appropriate, individual-specific cognitive stimulation (Massey
and Thorne 2006). Yet, in designing courses, faculty typically pre-select course
teaching methods independently of the particular students who enroll in the course.
Indeed, faculty often teach their courses using methods that are consistent with
their own personal learning styles (Thompson 1997). This paper presents and
evaluates different strategies accounting faculty can use in teaching accounting
ethics in ways that correspond to various students’ individual learning preferences.
As such, the strategies this paper provides can help accounting faculty to ensure
cognitive stimulation of a variety of students enrolled in their classes, which, in turn,
can lead to improved ethical reasoning skills.
Forum Paper
ETHICS INSTRUCTION: AN EXTERNAL VALIDATION
Mary Jo Billiot, New Mexico State University
David Daniel, New Mexico State University
Sid Glandon, University of Texas at El Paso
Terry Ann Glandon, University of Texas at El Paso
Abstract
In the early months of employment, entry-level accountants are exposed to a
variety of client circumstances that involve potential competing interests between
clients and various external financial statement users. Over time, experience and
training help these emerging professionals develop the ability to identify when
competing interests exist. Building on that foundation, professionals learn to
determine whether the competing interests contain an ethical component. These
two skills, the ability to identify and the ability to determine the ethical dimension,
combine into a concept referred to as ethical sensitivity. We propose as many
educators do that higher education should help move the student closer to the
capabilities of emerging professionals, thus building a basis earlier in their careers
for education and growth. The purpose of our research is to test whether a targeted
educational treatment can increase the ethical sensitivity of students and move
them closer to the performance levels of emerging professionals.
Shaub, Finn, and Munter (1993) assert that focusing on recognition skills
through ethics education leads to increased levels of ethical sensitivity. For an
educational process to be effective students must first learn to identify when the
interests of clients and other stakeholders are not aligned and then determine if
there is an ethical dimension to the situation. In our study we provide repeated
opportunities for students to learn to evaluate these types of situations and transfer
this knowledge to practical business situations.
Integration of ethics education in multiple accounting courses might provide
an enduring educational experience. By building a foundation early in their
academic careers we propose that students will be better prepared to deal with
ethical situations in subsequent courses and in the workplace. We developed an
educational treatment for the first Intermediate Accounting course, typically the
initial course in the accounting major. We test whether academic preparation can
lead to a higher level of ethical sensitivity and better preparation for meeting the
challenges of the accounting profession. Our results indicate that a properly
structured educational treatment improved students’ ethical sensitivity to the level
of the emerging professionals.
Concurrent Session 1A
INTEGRATING LIBERAL EDUCATION WITH BUSINESS AND ACCOUNTING
EDUCATIONIN A SENIOR UNDERGRADUATE CAPSTONE COURSE
Brian Shapiro, University of St. Thomas
Michael Naughton, University of St. Thomas
Abstract
University professors in both business and liberal education tend to agree that more
attention should be devoted to integrating liberal and business education, but they
tend to agree less about how to achieve that integration. This paper describes a
senior undergraduate university capstone course that the authors developed and
co-teach for future accounting and business professionals. The course draws upon
the philosophical, historical, literary, and theological dimensions of students’ liberal
education at our university, and deliberately relates those dimensions to business
and accounting. A principal objective is to engage students with the idea of vocation
and the pursuit of the common good in their chosen profession. We first describe
our general approach to integrating liberal education with accounting and business
education. Next, we describe our specific course content, our pedagogical emphasis
on class discussion and integrative essays, and how foundational texts from the
humanities can be applied to traditional cases in accounting and auditing. We then
provide answers to survey questions and excerpts from student writing as evidence
of student learning. The concluding section summarizes our approach, discusses
implications for accounting education, and identifies some questions for future
research.
Concurrent Session 1A
ETHICS INTEGRATION THROUGHOUT THE ACCOUNTING CURRICULUM:
HOW MUCH ETHICS COVERAGE OCCURS AND WHAT IS COVERED?
William F. Miller, University of Wisconsin – Eau Claire
D’Arcy A. Becker, University of Wisconsin – Eau Claire
Abstract
One driving force behind The Sarbanes-Oxley Act of 2002 (Sox) was to give the
government the power to deter ethical lapses by accountants through more
extensive oversight. As the recent resurgence in unethical conduct suggests, SOX
may have had a very limited effect on ethics in the accounting profession. One
reason may be that SOX was not designed to address the underlying causes of
accountants’ ethical failures.
Russell and Smith (2003) pointed directly at one cause: “If we are looking for a
primary contributing cause of corporate malfeasance at firms such as Enron, Equity
Funding, WorldCom, Sunbeam, Arthur Andersen and HealthSouth, we need look no
further than the classrooms of college and university accounting programs that have
not significantly adapted their methods of instruction or approach to accounting
and management education over the last 50-60 years”.
Although there are many routes accounting programs could take to improve ethics
education, most programs integrate ethics coverage across the accounting
curriculum rather than requiring a separate ethics course. While this choice is a
function of budgetary reality as much as educationally sound practice, it could be
effective in improving student ethics if it is done correctly. However, ethics coverage
in 2010 may not have progressed to the point of effectively helping students
develop more sound moral reasoning, in part because of how accounting educators
implement the coverage (Frank, Ofobike and Gradisher, 2010).
This paper examines the current level of ethics integration across the accounting
curriculum, analyzing the quantity, methods and topics included in coverage.
Results of a survey of U.S. accounting faculty on these issues are presented. Overall,
we find ethics integration efforts on a per-course basis fairly modest but the sum of
those efforts reasonably strong.
Concurrent Session 1B
AN ANALYSIS OF ACCOUNTING AND INTERNAL AUDITING EDUCATORS’
ETHICS: SURVEY COMPARISONS USING THE INTEGRATIVE SOCIAL
CONTRACTS THEORY
Philip H. Siegel, Augusta State University
John O’Shaughnessy, San Francisco State University
Jeffrey R. Miller, Augusta State University
Abstract
The concept of ethics is often subject to business functional interpretation.
These suppositions have had a significant impact on business practices and those
who teach business classes. Studies into ethical behavior have used the Integrative
Social Contracts Theory (ISCT) and the related 'Hypernorm' concept, which is a
methodology developed by Donaldson and Dunfee (1999). In two separate studies,
ISCT was the basis for identifying norms of ethically acceptable and unacceptable
behaviors of accounting educators and those of internal auditing educators. This
study compares the results of the two findings and may assist in a better
understanding of ethical values as they impact faculty and practitioner decisions
and actions.
Concurrent Session 1B
THE IMPACT OF CULTURE AND TRAINING ON CODE OF CONDUCT
EFFECTIVENESS: REPORTING OF OBSERVED UNETHICAL BEHAVIOR
Mary B. Curtis, University of North Texas
John Williams, University of North Texas
Abstract
Culture and communication determine the effectiveness of Code of Conduct
compliance. While culture is difficult to change, a typical recommendation for
communicating to increase adherence to Codes of Conduct, and therefore, improve
ethical behavior in organizations, is training on the Code. However, there is no
empirical evidence that Code training improves ethics-related behavior or
perceptions. Additionally, other evidence from this literature suggests that prior
observations of unethical behavior erode these perceptions.
We test the impact of two independent variables, training for Code of Conduct and
prior observations of unethical behavior), on intentions to report unethical behavior
in the future, as well as possible mediators of this relationship. We find that training
marginally increases intention to report and prior observations significantly
decrease intention to report. Regarding the two potential mediators, responsibility
to report and norms against whistleblowing, both do mediate the prior observationto-reporting intentions relationship, but instead moderate the training-to-reporting
intentions relationship.
Concurrent Session 2A
ACCOUNTABILITY IN PRIVATE PRISONS? A CASE STUDY OF THE
EFFECTIVENESS OF DIALOGIC EVALUATION
Linda M. English, The University of Sydney
C. Richard Baker, Adelphi University
Abstract
Privatization of public services has become the subject of considerable debate
during the last thirty years. Criticisms have focused on a lack of public
accountability and questionable measures of cost effectiveness and efficiency. This
paper explores the issue of accountability in a general sense by focusing on program
evaluation aspects of accountability relationships. In developing its first privately
managed prison, the state of Western Australia established an independent
statutory body, the Office of the Inspector of Custodial Services (OICS), to provide
external scrutiny, accountability and greater assurance regarding the achievement
of correctional service objectives. This paper explores how the OICS interpreted its
legislative mandate, articulated its inspection standards, and conducted its
inspections. The paper argues that in adopting a dialogic approach to program
evaluation (Guba and Lincoln, 2005), the OICS succeeded in ensuring that the
Department of Custodial Services (DCS) and the privately managed prison (Acacia)
would be held accountable to multiple stakeholders for prison quality. While the
objective of using privatized prison operations to spearhead reforms in the public
prison sector has not been fully achieved, the evidence indicates that Acacia Prison
has produced costs savings, and it is currently rated as one of two most effective
prison facilities in Western Australia.
Concurrent Session 2A
THE IMPACT OF SOX ON ETHICAL VIOLATIONS BY CPAS
Helen L. Brown-Liburd, Rutgers
Barbara M. Porco, Fordham University
Abstract
This study explored whether the passage of the Sarbanes-Oxley Act of 2002 has had
any effect on the number or types of violations of the AICPA Code of Professional
Conduct by practicing accountants. Data spanning from July 2000 until October
2008 was provided by the American Institute of Certified Public Accountants and
categorized according to gender, residence, date of infraction, and type of infraction
A one-way ANOVA test was performed on the number of violations to determine
whether the Act has had an effect on the number of violations that have occurred
since its enactment. A x2 for Goodness of Fit was performed on the data concerning
the types of violations that occurred to determine whether the Act has had any
effect on what types of violations are occurring since its enactment. A series of x2 for
Goodness of Fit analyses were also conducted to determine whether gender or place
of residence was significant. The results indicated that the number of violations has
increased and that the proportion of violation types is significantly different since
the enactment of the Act. Furthermore, place of residence of the individuals found
guilty of violations were found to be significant for violations of Rule 501Substandard Professional Conduct, Rule 501-Criminal-Business Related Infractions,
and Bylaw Section 7.4.6: Failure to Comply/Respond while gender were found not
to be significant.
Concurrent Session 2B
SYNTHESIZING WISDOM, INTELLIGENCE AND CREATIVITY IN
ACCOUNTING ETHICS
Michael K. Shaub, Texas A&M University
Abstract
The purpose of this paper is to describe an approach to ethical decision
making in accounting that is rooted in Sternberg’s (2003b) WICS (Wisdom,
Intelligence, and Creativity, Synthesized) model of leadership. Sternberg argues
that creativity is rooted in intelligence, that a certain level of intelligence is required
in order to be creative. However, intelligence is a necessary, but not sufficient,
condition for creativity. In addition, many people who are intelligent are not wise,
largely because they do not think dialogically nor dialectically, and thus they fall
prey to the five fallacies of thinking: egocentrism, omnipotence, omniscience,
invulnerability, and unrealistic optimism (Jordan and Sternberg 2006). Wisdom
involves balancing intrapersonal, interpersonal, and extrapersonal interests to
achieve a common good, similar to the tenets of stakeholder theory (Freeman
1984). It requires the ability to think dialogically, taking into account others’
interests, and dialectically, focusing on long-term effects and not just short-term
outcomes. The paper concludes by describing a creativity-focused approach to an
accounting ethics course that is designed to stimulate the development of students’
wisdom.
Concurrent Session 2B
ETHICAL PROMPTS AND THEIR EFFECTS ON THE INDIVIDUAL’S
EVALUATION OF ACCEPTABLE BUSINESS PRACTICES: CONSIDERATIONS
FOR CPAS
William H. Black, University of Mississippi
Barbara S. White, University of Mississippi
Abstract
In recent years, accounting regulators (including the AICPA, NASBA, state
boards of accountancy, PCAOB, and SEC) have imposed additional ethical
requirements on certified public accountants (CPAs). Continuing professional
education requirements now include mandatory training in ethics, which usually
addresses the rules in the AICPA Code of Professional Conduct (Code). After the
establishment of rules and restrictions on accounting practice by the Sarbanes Oxley
Act (SOX), the SEC and PCAOB now devote additional scrutiny to the work
performed by CPAs auditing public companies. These rules attempt to enforce moral
behavior and address the ethical challenges faced by accountants. However, the
ethical challenges faced by accountants include not only issues specifically
addressed in the Code or SOX, but also issues whose resolution includes concepts of
equity, fairness, and social responsibility that go beyond the Code.
The current research investigates the impact of ethical prompts on the
assessment of acceptable business practices by students today, who are the
professionals of the future. This is an extension of earlier research by Emerson and
Conroy (2004), who evaluated ethical attitudes of students in 1985 and 2001.
However, the current research includes an experimental manipulation via an ethical
prompt and an evaluation of the impact of such prompts. The results of this research
should be considered in light of the impact from the accounting scandals of Enron,
WorldCom, HealthSouth and the current crisis in the financial markets, which have
brought ethical issues to the forefront for today’s professionals and students.
Emerson and Conroy (2004) provide the survey instrument used in the current
research and lend support for the hypotheses presented and manipulations tested.
Emerson and Conroy followed an investigation of ethical attitudes of college
students in the mid 1980s with a study conducted in 2001.
Emerson and Conroy found that students in 2001 were significantly less
tolerant of questionable behavior than students in 1985 for most of the scenarios
included in the instrument. This could imply that attitudes are changing as a
function of time and increased ethical awareness.
Paper Session 3
AN EMPIRICAL ANALYSIS OF THE ETHICAL REASONING PROCESS OF
TAX PRACTITIONERS
Elaine Doyle, University of Limerick
Jane Frecknall Hughes, The Open University Business School
Barbara Summers, Leeds University Business School
Abstract
Ethical dilemmas involving tax issues were identified by members of the American
Institute of Certified Public Accountants as posing the most difficult ethical or moral
problem for them (Finn, Chonko & Hunt, 1988, pp. 607-609). The KPMG tax shelter
fraud case proves that the tax profession has not gone untainted in the age of
numerous accounting and corporate scandals such as the Enron débâcle (Sikka &
Hampton, 2005). High profile scandals serve to highlight the problems caused by
differences in ethical judgement among accountants and tax practitioners and the
issue of ethics has been brought publicly to the forefront of the profession.
However, the issue of ethics in tax practice has been largely unexplored in the
academic literature (Erard, 1993; Marshall, Armstrong & Smith, 1998; Frecknall
Hughes, 2002), and little work has yet been done to examine how tax practitioners
approach ethical dilemmas.
Cognitive psychology posits that before an individual reaches a decision about how
to behave ethically in a specific situation, ethical or moral reasoning takes place at a
cognitive level. Kohlberg’s (1969, 1973) stage sequence theory identifies six stages
of ethical reasoning and Rest’s Defining Issues Test (1979a, 1986a) provides us with
a means by which to measure the ethical reasoning ability of individuals using
hypothetical ethical dilemmas of a broad social nature. In considering the ethical
reasoning ability of tax practitioners three main issues need to be considered: the
impact of the tax context itself on the issues raised; the potential for the profession
to be attractive to people for whom a particular level of moral reasoning
predominates; and the training/ socialisation of practitioners in their professional
context. We investigate these issues in this paper. Combining Rest’s Defining Issues
Test with a newly developed tax context text, the moral reasoning of tax
practitioners is examined in both a social and tax context using a control group of
non-tax specialists in the research design to facilitate the interpretation of results.
Paper Session 3
CASH-BASED EXECUTIVE INCENTIVE COMPENSATION AND NET
EARNINGS – ANALYSIS IN LIGHT OF THE FINANCIAL CRISIS OF 2008
Michael A. Santoro, Rutgers Business School
Ronald J. Strauss, Rutgers Business School
Abstract
This article examines a particular form of executive compensation, to wit executive
incentive compensation paid in cash, a compensation practice susceptible to
particular forms of moral hazard and conflict of interest. Beginning in 2007 and
continuing throughout 2008 and 2009, many firms in the financial services industry
incurred enormous losses while in the years immediately preceding this deluge of
losses many executives received substantial cash-based compensation. This
substantial divergence of economic outcome between shareholder and executive is
the focal point of the analysis here. We examine, under several forms of moral
reasoning the payment of cash-based incentive compensation in the financial
industry and in each case cannot find moral justification for such practices. Further,
such practices create moral hazard, conflicts of interest, and unjust outcomes. Cashbased incentive compensation is largely based upon measures of short-term
earnings; earnings which may not fully reflect substantial risk taking, the outcome of
which remains uncertain at the time that risk- free cash bonuses are paid.
Concurrent Session 4A
A CROSS-CULTURAL STUDY ON ETHICAL DECISION-MAKING OF
ACCOUNTING STUDENTS IN THE U.S. AND TAIWAN
Yi-Hui Ho, Chang Jung Christian University
Chieh-Yu Lin, Chang Jung Christian University
Abstract
The increasing globalization of business activities and recent accounting scandals
have brought about a growing research interest on accounting ethical decisions in
cross-cultural contexts. Taking accounting students in the U.S. and Taiwan as
research subjects, this study investigates the cross-cultural differences in ethical
decision-making for future accountants from different cultures. The instruments
used in the study consist of the Accounting-specific Defining Issues Test (ADIT),
which is used to assess participants’ moral reasoning ability, the Accounting-specific
Multidimensional Ethics Scales (AMES), which is employed to measure participants’
ethical sensitivity, ethical intention, and ethical orientation when facing ethical
dilemmas, and the Values Survey Module 1994 (VSM 94), which is used to
determine participants’ scores in each of Hofstede’s cultural dimensions. Based on
the concept of matched-samples, undergraduate accounting students from the
United States and Taiwan were studied. Results of the study indicate significant
differences in ethical awareness, ethical development, ethical intention, and ethical
orientation between the U.S. and Taiwanese accounting students. The differences in
the relationships between ethical perceptions are situation-specific.
Concurrent Session 4A
WHAT INFLUENCES ETHICAL DECISIONS: A COMPARISON OF BUSINESS
STUDENTS IN THE U.S. AND MEXICO
Deborah W. Thomas, University of Tulsa
Tracy S. Manly, University of Tulsa
Virginia Kalis, Instituto Tecnologico Autonomo de Mexico (ITAM)
Yanira Petrides, Instituto Tecnologico Autonomo de Mexico (ITAM)
Abstract
Current statistics on unethical behavior by millennial students are not
encouraging. The occurrences of cheating are increasing while these students
report they feel prepared to make ethical decisions in the workplace. This
disconnect between millennials’ confidence in making ethical decisions while
condoning unethical behavior is a challenge for their future employers. Accounting
practitioners, even more than accounting academics, recognize the need for ethics
education in accounting, ranking ethics as the second most important topic for
auditing courses (Amritage and Poyzer 2010). For ethics education to be effective,
educators should have an understanding of what influences the ethical decisions of
our students. This study investigates the underlying moral compass of current
undergraduate students in the U.S and Mexico. Prior literature on the influences of
ethical decision making for millennial students suggests a number of items that
might be important. This paper adds to that work by surveying current students
directly about their perceptions of what is most important to them. The strongest
result from this research is that students, almost uniformly, agree that their own
personal consciences are the most important determinants in their ethical choices.
Students from both countries also rank the influence from leaders and celebrities as
the least important. This study reports on the eight items presented to the students
and further compares responses by country, age, and gender. Finally,
recommendations for education techniques are given with ways to help students
transition into the professional environment.
Concurrent Session 4A
ETHICAL ATTITUDES OF ACCOUNTANTS IN BRAZIL: RECENT EVIDENCE
FROM A STUDENT AND ACCOUNTANTS SURVEY
Tatiane Antonovz, Federal University of Parana
Charles Stanley, Baylor University
Marcia Maria dos Santor Bortolocci Espejo, Federal University of Parana
Abstract
Major scandals at companies such as Enron, WorldCom, Health South, Tyco and
others shook the business world. Unfortunately, these scandals involved members
of the accounting profession. As a result, questions arose about the ethical attitudes
of accountants and the role of ethics within the accounting profession.
In 2006, a study by Emerson, Conroy, and Stanley measured the ethical attitudes of
American CPAs using a survey that presented different ethical scenarios. American
CPAs were asked to determine how ethical a situation was. This study s replicated
the Emerson, et al study as a basis for assessing the ethical attitudes of Brazilian
accounting students and Brazilian professionals. In the current study, we used the
25 scenarios that were used in the Emerson study. We wanted to determine the
ethical attitudes of Brazilian accountants and students and their perceptions when
confronted with various ethical situations. As a result, we were able to obtain a
representative sample of 785 usable and valid questionnaires which consisted of
307 accounting professionals and 478 accounting students from two universities
within this area of Brazil.
Our results showed that while there were some differences in attitudes between
students and professionals, there were a lot of similarities. These results were
consistent with the results of the Emerson study that also found few differences
within the United States. However, there are number of significant differences
between the U. S. and Brazil that appear due to differences in culture. In addition,
we found that there are also a number of similarities.
As the accounting profession becomes a more global profession and as the
movement to International Financial Reporting Standards increases, understanding
the similarities and differences about ethical attitudes of accountants from different
countries and cultures becomes more important and critical to global accounting.
This study takes a first step to understanding the ethical attitudes of accountants
from different countries and the impact that ethical attitudes can have on
accounting.
Concurrent Session 4B
BECOMING WHAT YOU PRETEND TO BE: LARGE ACCOUNTING FIRM
ADVERTISING AND THE DEATH OF PROFESSIONALISM
Timothy J. Fogarty, Case Western Reserve University
Abstract
This paper reviews the continued relevance of accountancy’s professional claims in
an era heavily marked by a voracious commercialization of practice. It suggests that
public accounting firms can now be best understood by how they hold themselves
out to their clients, rather than in terms of their history. Commercialization in
general, and advertising in particular, is seen as having dealt a crucial blow to classic
ideas of professionalism. This paper proposes that a qualitative reading of print
advertising by the international firms over the past few years provides a new means
to understand these entities and their current environment. This is conducted in
ways that confront the classic professional model, and produces results that suggest
its failure to describe the large accounting firm.
Concurrent Session 4B
Commercialism and Universities: An Ethical Analysis
Steven M. Mintz
Arline Savage
Richard Carter
California Polytechnic State University, San Luis Obispo
Abstract
As a consequence of the depressed economy, federal deficits, lack of state
funding, budget cutbacks for higher education, and inadequate funding for
specialized programs at universities, the increasing solicitation of outside sources of
funds by universities is an economic reality. These kinds of relationships can create
a conflict of interests that impairs objective decision making by promoting a
company or product on campus that may not be socially desirable such as the
decision to name the athletic lodging facility on the campus of the University of
Kentucky the Wildcat Coal Lodge. The reality today is that university administrators,
who have significant decision-making powers, proactively seek large corporate
sources of funding that may compromise academic values including academic
freedom and the ability to make institutional decisions without the influence of
commercial interests. Concern has existed since 1979 that such influences might
bias academic accountants when Moonitz cautioned against the interactions
between accounting educators and large CPA firms. CPA firm funding of chair
positions, professorships, and faculty activities bring into question whether advice
to students about employment issues may be tainted. In this paper, we discuss
commercialism and its effects on universities using a variety of examples including
technology transfer, influencing on-campus presentations, commercial ties between
universities and companies that led to corporate partnerships with companies such
as Coca-Cola, Pepsi-Cola, and Nike that influence student freedom to choose, and
restrictions on curriculum content such as donations by BB&T corporation that
require the teaching of Ayn Rand’s objectivist philosophy. We analyze these
relationships from an ethical perspective by examining possible conflicts of interest.
We also examine the costs and benefits of commercialism. We conclude that if
institutions of higher learning continue down the path of commercialization, there
may come a time when the name of a university goes to the highest bidder.
Concurrent Session 4B
THE HISTORY OF DEPROFESSIONALIZATION IN ACCOUNTANCY IN THE U.S.
James C. Lampe, Missouri State University
Andy Garcia, Bowling Green State University
Abstract: The time period from the mid-1980s through the current time is
described as an era of deprofessionalization in U.S. public accountancy. The time
period through 2002 is further categorized as a pre-SOX period of rapid decrease in
professional status. Since 2002, a post-SOX period is discussed in terms of
combined professionalization and deprofessionalization resulting in the
maintenance of the status quo following the loss of professional status. During the
pre-SOX period it appears that leadership in the public accountancy industry
responded to a nearly perfect storm of changes confronting the profession with a
strong orientation to self-interest and profit maximization resulting in substantial
and rapid deprofessionalization. Between the mid-1980s and 2002, numerous
critics of public accountancy have asserted that leaders in the profession lost or
forgot what allowed it to be recognized as a profession and instead held everincreasing profits as their primary goal. The conclusion presented is that public
accountancy has lost its professional status in or before 2002 and has not yet
regained it making public accountancy the shortest lived profession in U.S. history.