Hostname: page-component-cb9f654ff-c75p9 Total loading time: 0 Render date: 2025-08-06T01:16:39.321Z Has data issue: false hasContentIssue false
  • English
  • Français

The Impact of Ethical Development and Cultural Constructs on Auditor Judgments: A Study of Auditors in Taiwan

Published online by Cambridge University Press:  23 January 2015

Cynthia Jeffrey ,
William Dilla  and
Nancy Weatherholt
Get access Rights & Permissions [Opens in a new window]

Abstract:

This research examines in a collectivist culture the influence of cognitive moral development, attitudes toward rule-directed behavior, and the perceived importance of codes of conduct and professional standards on auditor judgments about ethical dilemmas. Taiwanese audit professionals were asked to respond to two ethical dilemmas. The first dilemma concerns a situation in which the auditor is asked to acquiesce to a controller’s request to conceal an irregularity. The probability that the auditor’s acquiescence is discovered (i.e., the threat of a sanction) was manipulated in this scenario. The second dilemma involves a case in which the auditor has information that a write-down of obsolete inventory will have a material effect on the earnings of a corporation, and must consider whether or not to inform an individual who is heavily invested in the corporation. The individual’s ingroup status (i.e., whether the individual was a relative or friend of the auditor) was manipulated in this scenario.

Auditors were more likely to agree with violations of ethical standards in the first scenario (concealing a client employee’s irregularity) than in the second (revealing confidential information to parties outside the client). In the first scenario, auditors with lower levels of cognitive moral development were less likely to agree with violations of ethical standards when the threat of a sanction was present, while the judgments of those with higher levels of cognitive moral development were not affected by the presence of sanctions. Contrary to expectations, auditors were more likely to agree with violations of ethical standards when the individual involved was a close friend, rather than a relative. In general, as the perceived importance of rules increased, the propensity to violate the Code of Conduct decreased.

Information

Type
Articles
Information
Business Ethics Quarterly , Volume 14 , Issue 3 , July 2004 , pp. 553 - 579
Copyright
Copyright © Society for Business Ethics 2004

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Article purchase

Temporarily unavailable

References

Agacer, G. M., and Doupnik, T. S.. 1991. “Perceptions of Auditor Independence: A Cross-Cultural Study.” International Journal of Accounting 26: 220–37.Google Scholar
Arlow, P., and Ulrich, T.. 1980. “Business Ethics, Social Responsibility, and Business Students: An Empirical Comparison of Clark’s Study.” Akron Business and Economic Review (Fall): 17–22.Google Scholar
Arlow, P., and Ulrich, T.. 1983. “Can Ethics be Taught to Business Students? The Collegiate Forum (Spring): 17.Google Scholar
ArnoldD. F., Sr D. F., Sr., and Bernardi, R. A.. 1997. “An Examination of British, Irish, and U.S. Partners’ Responses to Ethical Dilemmas.” Research in Accounting Regulation 1 (supplement): 149–72.Google Scholar
ArnoldD. F., Sr. D. F., Sr., Bernardi, R. A., and Niedermeyer, P. E.. 1999. “The Effect of Independence on Decisions Concerning Additional Audit Work: A European Perspective.” Auditing: A Journal of Practice and Theory 18 (Supplement): 45–67.Google Scholar
ArnoldD. F., Sr. D. F., Sr., Bernardi, R. A., and Niedermeyer, P. E.. 2001. “The Association Between European Materiality Estimates and Client Integrity, National Culture, and Litigation.” International Journal of Accounting 36: 459–83.CrossRefGoogle Scholar
ArnoldD. F., Sr D. F., Sr., and Ponemon, L.. 1991. “Internal Auditor’s Perceptions of Whistle-Blowing and the Influence of Moral Reasoning: An Experiment.” Auditing: A Journal of Practice and Theory 10: 1–15.Google Scholar
Bacharach, S. B., and Aiken, M.. 1976. “Structural and Process Constraints on Influence in Organizations: A Level-Specific Analysis.” Administrative Science Quarterly 21: 623–42.Google Scholar
Bell, D. 1987. “The World and the United States in 2013.” Daedelus 116: 1–31.Google Scholar
Bollom, W. J. 1988. “Ethics and Self-Regulation for CPAs in the U.S.A.” Journal of Business Ethics 71: 55–61.Google Scholar
Cheesman, B. 1997. “Insider Trading Hits Taiwan Bourse.” Business Times (Singapore) (July 16, Section China/Hongkon/Taiwan): 7.Google Scholar
Cohen, J. R., Pant, L., and Sharp, D. J.. 1992. “Cultural and Socioeconomic Constraints on International Codes of Ethics: Lessons from Accounting.” Journal of Business Ethics 11: 687–700.Google Scholar
Cohen, J. R., Pant, L., and Sharp, D. J.. 1995. “An Exploratory Examination of International Differences in Auditors Ethical Perceptions.” Behavioral Research in Accounting 7: 37–64.Google Scholar
Colby, A., and Kohlberg, L.. 1987. The Measurement of Moral Judgment. New York: Cambridge University Press.Google Scholar
Dow, Jones. 1997. “Taiwan to Increase Insider Trading Penalty.” The New York Times (July 9, late edition Section D): 3.Google Scholar
Fritzsche, D. J., and Becker, H.. 1983. “Ethical Behavior of Marketing Managers.” Journal of Business Ethics 2: 291–99.Google Scholar
Gaa, J. C. 1990. “A Game-Theoretic Analysis of Professional Rights and Responsibilities.” Journal of Business Ethics 9: 159–69.Google Scholar
Gaa, J. C.. 1992. “The Auditor’s Role: The Philosophy and Psychology of Independence and Objectivity.” Proceedings of the Deloitte and Touche/University of Kansas Symposium on Auditing Problems. University of Kansas School of Business: 7–43.Google Scholar
Gaa, J. C.. 1994. “The Ethical Foundations of Public Accounting.” Vancouver: CGA-Canada Research Foundation.Google Scholar
Herdman, R. K. 2002. Speech by SEC Staff: “Improving Standard Setting to Advance the Interests of Investors.” Before the 22nd Annual Ray Garrett Jr. Corporate and Securities Law Institute, Northwestern University, Chicago, Illinois. April 11, 2002. http://www.sec.gov/news/speech/spch551.htm.Google Scholar
Hofstede, G. 1991. Cultures and Organizations: Software of the Mind. Maidenhead, Berkshire: McGraw-Hill Book Company Europe.Google Scholar
Hofstede, G.. 1980. Culture’s Consequences. Beverly Hills, Calif: Sage Publications.Google Scholar
Hsu, F. L. K. 1981. American and Chinese: Passage to Differences (3rd edition). Honolulu: University of Hawaii Press.Google Scholar
Jeffrey, C., and Weatherholt, N.. 1996. “Ethical Development, Professional Commitment, and Rule Observance Attitudes: A Study Of CPAs and Corporate Accountants.” Behavioral Research in Accounting 8: 8–31.Google Scholar
Jones, T. M. 1991. “Ethical Decision Making by Individuals in Organizations: An Issue-Contingent Model.” Academy of Management Review 16(2): 366–95.Google Scholar
Kohlberg, L. 1958. “The Development of Modes of Moral Thinking and Choice in the Years 10 to 16.” University of Chicago: Ph.D. dissertation.Google Scholar
Kohlberg, L.. 1969. “Stage and Sequence: The Cognitive-Developmental Approach to Socialization.” In Handbook of Socialization Theory and Research, ed. Goslin, D.. Chicago: Rand McNally, 347–480.Google Scholar
Lampe, J. C., and Finn, D. W.. 1992. “A Model of Auditors’ Ethical Decision Processes.” Auditing: A Journal of Practice and Theory 11 (Supplement): 33–59.Google Scholar
Lampe, J. C., and Sutton, S. G.. 1992. “International Auditing: Cross-Cultural Impact on Auditing.” Advances in International Accounting 5: 213–36.Google Scholar
McKinnon, J. 1984. “Cultural Constraints on Audit Independence in Japan.” The International Journal of Accounting 20: 17–43.Google Scholar
Neter, J., Wasserman, W., and Kutner, M. H.. 1990. Applied Linear Statistical Models, 3rd ed. Homewood, Ill.: Irwin.Google Scholar
Piaget, J. 1970. “Piaget’s Theory.” In Carmichael’s Manual of Child Psychology, ed. Mussen, P. H.. New York: Wiley, 703–32.Google Scholar
Piaget, J.. 1965 (1932). The Moral Judgment of the Child, trans. Gabian, M.. New York: The Free Press.Google Scholar
Ponemon, L. 1992a. “Ethical Reasoning and Selection-Socialization in Accounting.” Accounting, Organizations and Society 17(3/4): 239–58.Google Scholar
Ponemon, L.. 1992b. “Auditor Underreporting of Time and Moral Reasoning: An Experimental Lab Study.” Contemporary Accounting Research 1: 71–89.Google Scholar
Ponemon, L.. 1993. “The Influence of Ethical Reasoning on Auditor’s Perceptions of Management’s Integrity and Competence.” Advances in Accounting 11: 1–29.Google Scholar
Ponemon, L., and Gabhart, D. R.. 1990. “Auditor Independence Judgments: A Cognitive Developmental Model and Experimental Evidence.” Contemporary Accounting Research 7: 227–51.Google Scholar
Ponemon, L., and Gabhart, D. R.. 1993. “Ethical Reasoning in Accounting and Auditing.” Vancouver: Canadian General Accountants’ Research Foundation.Google Scholar
Ponemon, L., and Gabhart, D. R.. 1994. “Ethical Reasoning Research in the Accounting and Auditing Professions.” In Moral Development in the Professions: Psychology and Applied Ethics, ed. Rest, J. and Narvaez, D.. Hillsdale, N.J.: Lawrence Erlbaum, 101–20.Google Scholar
Radebaugh, L. H., and Gray, S. J.. 1997. International Accounting and Multinational Enterprises. New York: John Wiley.Google Scholar
Randall, D. M., and Fernandes, M. F.. 1991. “The Social Desirability Response in Ethics Research.” Journal of Business Ethics 10: 805–17.Google Scholar
Rest, J. R. 1979a. Development in Judging Moral Issues. Minneapolis: University of Minnesota Press.Google Scholar
Rest, J. R.. 1979b. Revised Manual for Defining Issues Test. Minneapolis: University of Minnesota Press.Google Scholar
Rest, J. R.. 1986. Moral Development: Advances in Research and Theory. New York: Praeger.Google Scholar
Rest, J. R.. 1994. “Background: Theory and Research.” In Moral Development in the Professions: Psychology and Applied Ethics, ed. Rest, J. and Narvaez, D.. Hillsdale, N.J.: Lawrence Erlbaum, 1–26.Google Scholar
Shaub, M. 1994. “An Analysis of the Association of Traditional Demographic Variables with the Moral Reasoning of Auditing Students and Auditors.” Journal of Accounting Education. (Winter): 1–26.Google Scholar
Sweeney, J. T., and Roberts, R. W.. 1997. “Cognitive Moral Development and Auditor Independence.” Accounting, Organizations and Society 22(3/4): 337–52.Google Scholar
Thoma, S. J. 1986. “Estimating Gender Differences in the Comprehension and Preference of Moral Issues.” Developmental Review 6: 165–80.Google Scholar
Trevino, L. K. 1986. “Ethical Decision Making in Organizations: A Person-Situation Interactionist Model.” Academy of Management Review 11(3): 601–17.Google Scholar
Triandis, H. C. 1990. “Cross-Cultural Studies of Individualism and Collectivism.” In Nebraska Symposium on Motivation 1989, ed. Dienstbier, R. A. and Berman, J. J.. Lincoln: University of Nebraska Press: 40–133.Google Scholar
Windsor, C., and Ashkanasy, . 1995. “The Effect of Client Management Bargaining Power, Moral Reasoning Development, and Belief in a Just World on Accountant Independence.” Accounting, Organizations and Society 20(7/8): 701–20.Google Scholar