Recognizing Ethical Issues

An Examination of Practicing Industry Accountants and Accounting Students

Krista Fiolleau, Steven Kaplan

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

It has long been recognized that accountants practicing in business settings have a dual role: (1) as employees, they are bound to the organization, and (2) as professionals, they are bound by the profession’s code of ethical conduct (Westra, Journal of Business Ethics 5(2): 119–128, 1986). These two roles highlight the need to recognize and consider both the ethical and economic implications of their decisions. Practicing industry accountants are commonly involved in a broad range of their firm’s business practices and decision making, and are increasingly exposed to the commercial aspects of their companies. Also, during their education, they were trained on their professional responsibilities. However, in general, this education was not recent and may not have been reinforced. By contrast, accounting students have been recently and repeatedly exposed to and have knowledge about their professional responsibilities as an accountant, but limited, if any, exposure to the commercial aspects of business. Consequently, our first hypothesis predicts that the ethical sensitivity of practicing industry accountants will be lower than that of accounting students. We find limited support for this hypothesis. Second, we also examine company reward structure and predict that ethical sensitivity will be lower for those in a company with a reward structure narrowly focused only on financial goals as compared to those in a company with a broad reward structure (e.g., including rewards for both financial and non-financial goals). Third, we predict that the difference in ethical sensitivity levels between those in a company with a narrow reward structure as compared to those in a company with a broad financial reward structure will be higher for practicing industry accountants compared to accounting students. Results from our study generally support these last two predictions. Ethical sensitivity is lower for those in a company with a reward structure narrowly focused only on financial goals as compared to those in a company with a broad reward structure, suggesting that companies may be able to increase ethical awareness in their organizations by including non-financial goals in their reward structures.

Original languageEnglish (US)
Pages (from-to)1-18
Number of pages18
JournalJournal of Business Ethics
DOIs
StateAccepted/In press - Apr 20 2016

Fingerprint

reward
examination
industry
student
Ethical issues
Industry
Accounting students
Reward
Accountants
Ethical Issues
dual role
responsibility
business ethics
general education
profession
employee
firm
decision making
organization
Ethical sensitivity

Keywords

  • Earnings management
  • Ethical awareness
  • Ethical sensitivity
  • Professional identity
  • Professionalism
  • Rewards structure

ASJC Scopus subject areas

  • Business and International Management
  • Economics and Econometrics
  • Business, Management and Accounting(all)
  • Law
  • Arts and Humanities (miscellaneous)

Cite this

Recognizing Ethical Issues : An Examination of Practicing Industry Accountants and Accounting Students. / Fiolleau, Krista; Kaplan, Steven.

In: Journal of Business Ethics, 20.04.2016, p. 1-18.

Research output: Contribution to journalArticle

@article{e3df59b72a294ea1b11db4e970a0e1a4,
title = "Recognizing Ethical Issues: An Examination of Practicing Industry Accountants and Accounting Students",
abstract = "It has long been recognized that accountants practicing in business settings have a dual role: (1) as employees, they are bound to the organization, and (2) as professionals, they are bound by the profession’s code of ethical conduct (Westra, Journal of Business Ethics 5(2): 119–128, 1986). These two roles highlight the need to recognize and consider both the ethical and economic implications of their decisions. Practicing industry accountants are commonly involved in a broad range of their firm’s business practices and decision making, and are increasingly exposed to the commercial aspects of their companies. Also, during their education, they were trained on their professional responsibilities. However, in general, this education was not recent and may not have been reinforced. By contrast, accounting students have been recently and repeatedly exposed to and have knowledge about their professional responsibilities as an accountant, but limited, if any, exposure to the commercial aspects of business. Consequently, our first hypothesis predicts that the ethical sensitivity of practicing industry accountants will be lower than that of accounting students. We find limited support for this hypothesis. Second, we also examine company reward structure and predict that ethical sensitivity will be lower for those in a company with a reward structure narrowly focused only on financial goals as compared to those in a company with a broad reward structure (e.g., including rewards for both financial and non-financial goals). Third, we predict that the difference in ethical sensitivity levels between those in a company with a narrow reward structure as compared to those in a company with a broad financial reward structure will be higher for practicing industry accountants compared to accounting students. Results from our study generally support these last two predictions. Ethical sensitivity is lower for those in a company with a reward structure narrowly focused only on financial goals as compared to those in a company with a broad reward structure, suggesting that companies may be able to increase ethical awareness in their organizations by including non-financial goals in their reward structures.",
keywords = "Earnings management, Ethical awareness, Ethical sensitivity, Professional identity, Professionalism, Rewards structure",
author = "Krista Fiolleau and Steven Kaplan",
year = "2016",
month = "4",
day = "20",
doi = "10.1007/s10551-016-3154-2",
language = "English (US)",
pages = "1--18",
journal = "Journal of Business Ethics",
issn = "0167-4544",
publisher = "Springer Netherlands",

}

TY - JOUR

T1 - Recognizing Ethical Issues

T2 - An Examination of Practicing Industry Accountants and Accounting Students

AU - Fiolleau, Krista

AU - Kaplan, Steven

PY - 2016/4/20

Y1 - 2016/4/20

N2 - It has long been recognized that accountants practicing in business settings have a dual role: (1) as employees, they are bound to the organization, and (2) as professionals, they are bound by the profession’s code of ethical conduct (Westra, Journal of Business Ethics 5(2): 119–128, 1986). These two roles highlight the need to recognize and consider both the ethical and economic implications of their decisions. Practicing industry accountants are commonly involved in a broad range of their firm’s business practices and decision making, and are increasingly exposed to the commercial aspects of their companies. Also, during their education, they were trained on their professional responsibilities. However, in general, this education was not recent and may not have been reinforced. By contrast, accounting students have been recently and repeatedly exposed to and have knowledge about their professional responsibilities as an accountant, but limited, if any, exposure to the commercial aspects of business. Consequently, our first hypothesis predicts that the ethical sensitivity of practicing industry accountants will be lower than that of accounting students. We find limited support for this hypothesis. Second, we also examine company reward structure and predict that ethical sensitivity will be lower for those in a company with a reward structure narrowly focused only on financial goals as compared to those in a company with a broad reward structure (e.g., including rewards for both financial and non-financial goals). Third, we predict that the difference in ethical sensitivity levels between those in a company with a narrow reward structure as compared to those in a company with a broad financial reward structure will be higher for practicing industry accountants compared to accounting students. Results from our study generally support these last two predictions. Ethical sensitivity is lower for those in a company with a reward structure narrowly focused only on financial goals as compared to those in a company with a broad reward structure, suggesting that companies may be able to increase ethical awareness in their organizations by including non-financial goals in their reward structures.

AB - It has long been recognized that accountants practicing in business settings have a dual role: (1) as employees, they are bound to the organization, and (2) as professionals, they are bound by the profession’s code of ethical conduct (Westra, Journal of Business Ethics 5(2): 119–128, 1986). These two roles highlight the need to recognize and consider both the ethical and economic implications of their decisions. Practicing industry accountants are commonly involved in a broad range of their firm’s business practices and decision making, and are increasingly exposed to the commercial aspects of their companies. Also, during their education, they were trained on their professional responsibilities. However, in general, this education was not recent and may not have been reinforced. By contrast, accounting students have been recently and repeatedly exposed to and have knowledge about their professional responsibilities as an accountant, but limited, if any, exposure to the commercial aspects of business. Consequently, our first hypothesis predicts that the ethical sensitivity of practicing industry accountants will be lower than that of accounting students. We find limited support for this hypothesis. Second, we also examine company reward structure and predict that ethical sensitivity will be lower for those in a company with a reward structure narrowly focused only on financial goals as compared to those in a company with a broad reward structure (e.g., including rewards for both financial and non-financial goals). Third, we predict that the difference in ethical sensitivity levels between those in a company with a narrow reward structure as compared to those in a company with a broad financial reward structure will be higher for practicing industry accountants compared to accounting students. Results from our study generally support these last two predictions. Ethical sensitivity is lower for those in a company with a reward structure narrowly focused only on financial goals as compared to those in a company with a broad reward structure, suggesting that companies may be able to increase ethical awareness in their organizations by including non-financial goals in their reward structures.

KW - Earnings management

KW - Ethical awareness

KW - Ethical sensitivity

KW - Professional identity

KW - Professionalism

KW - Rewards structure

UR - http://www.scopus.com/inward/record.url?scp=84964318372&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=84964318372&partnerID=8YFLogxK

U2 - 10.1007/s10551-016-3154-2

DO - 10.1007/s10551-016-3154-2

M3 - Article

SP - 1

EP - 18

JO - Journal of Business Ethics

JF - Journal of Business Ethics

SN - 0167-4544

ER -