pro fess ion - TEI EMTdigilib.teiemt.gr/jspui/bitstream/123456789/3543/1/... · most known, Xerox, WorldCom and Qwest Communications are only some of the firms which were blamed for

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ACKNOWLEDGEMENTS

I would especially like to thank my supervisor, Dr Mandilas Athanasios, for his wide-

ranging support and meticulousness in providing me with the needed feedback

throughout the course of my study.

Special thanks to Dr. Dimitriadis Eustathios for his valuable assistance as far as the

statistic analysis is concerned.

I owe my deepest gratitude to my parents for their psychological and economic

support to me. Nothing would be successfully completed without them!

Lastly, I offer my regards to all those who helped and encouraged me during the

completion of this project.

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Table of Contents

1) Introduction………………………………………………………………..…3

2) Literature Review…………………………………………………………….4

2.1 Learning from past experiences…………………………….……………...5

2.2 The principle characteristics of accounting………………………………..6

2.3 Accounting manipulation and creative accounting……………………......7

2.4 Ethics, Morals and Dilemmas……………………………………………..8

2.5 Philosophical approaches for moral issues…………………………...…..10

2.6 Ethical decision-making……………………………………………….....11

2.7 Theoretical framework…………………………………………………...17

2.8 Academic and workplace ethical training………………………………..21

3) Methodological Approach……………………………………….…………25

3.1 Rationale………………………………………...………………………..25

3.2 Hypotheses……………………………………….………………………26

3.3 Question generation………………………………………………………27

3.4 Participants……………………………………………………………….28

4) Results & Discussion………………………………….…………………….29

4.1 Demographic characteristics………………………..……………………29

4.2 Sampling adequacy………………………………………………………30

4.3 Factor analysis……………………………………………………………30

4.4 Results……………………………………...…………………………….31

5) Conclusions………………………………………………………………….37

6) Appendices-A……………………….……………………………………….39

7) Appendices-B…….……….…………………………………………………45

8) Bibliography…….….……………………………………………………….57

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Tables

Fig.1: Resolving an ethical dilemma

Fig.2: Ethics decision tree

Fig.3: Kohlberg’s level of moral development

Fig.4: Rest’s model of ethical action

Fig.5: The Jones model

Fig.6: Thorne’s model

Fig.7: Research model

Table 4.1: Demographic characteristics of the sample

Table 4.2: Ethics educated or not

Table 4.3: Sampling adequacy

Table 4.4: Factor analysis

Table 4.5: Ethics knowledge

Table 4.6: Anova analysis of moral reasoning

Table 4.7: Anova analysis of ethical attitude

Table 4.8: Comparison of the responses 10-10.1




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1. Introduction

The accounting community has faced an amount of problems during the last decades;

especially by the time when accounting scandals came to light. Enron, perhaps the

most known, Xerox, WorldCom and Qwest Communications are only some of the

firms which were blamed for accounting scandals and manipulated financial results.

The list of such cases increases every year; a sign that something needs to be done in

the field of accounting ethics (Armstrong, et al., 2003).

As education can influence and shape ones behavior, it was one of the first factors

blamed for poor ethical accountants. It has been stated that poor and not up-to date

university curricula as well as non existing training of professionals in the field of

ethics and morality acted like dominoes in firms’ collapses (Amernic, et al., 2004).

Not only firms as entities have to confront those problems, but also the society is

affected (Navarro, et al., 2009).

A lot of researches have tried to find answers on how to minimize as much as possible

accounting scandals emerged from poor ethics education. The majority of them have

used accounting students as their research population (Haywood, et al., 2009). As

theory differs from real practice, students with little or in some cases non working

experience could understand little on what they were asked and so their answers were

basically based on imagination; in other words everything tended to be either black or

white (Boyce, 2008).

One of the goals set by this research is the review of the existing literature in ethics

and the analysis of ethics courses contribution on the elimination of the economic

scandals. In order to achieve a broader view of the situation, the review of the

literature included a variety of sources, i.e. academic, professional and business

publications. The researcher also aims to examine the kind of effects, if any courses in

ethics or morality have on the accountants’ moral behavior. Effects such as improved

abilities of reasoning, awareness or attitudes are some of the elements which the

current thesis aims to identify.

The current dissertation has five main chapters. The introductory chapter provides an

overview of the dissertation structure, aiming to present how the chapters are

interrelated. The second chapter presents the relevant literature review on ethics. In

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the third chapter, the research questions, the methodological approach and the

sampling issues are presented. The fourth chapter presents the results accrued from

the statistical analysis conducted. Finally, in the fifth chapter all the concluding

statements in accordance with some recommendations on future research are cited.

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2. Literature Review

2.1 Learning from past experiences

As soon as the new millennium began a series of accounting scandals and corporate

collapses shook up the global business world. Perhaps the most well-known collapse

is that of Enron’s which affected not only employees but a thousand of investors as

well.

In October 2001 Pandora’s Box opened, when Enron announced a $544 million

reduction in its after-tax net income and an additional $1.2 billion in its stockholder’s

equity. In about a month later, the company announced that due to accounting errors

its stockholder’s equity had to change, from 1997 until 2000. Within one month the

company’s equity decreased for about $1.7 billion. In December 2002, Enron was

finally filed for bankruptcy under Chapter 11 of the United States Bankruptcy Code

and was accused for poor ethics. For several years the company was proved to cook

its books in order to hide debts and financial instability. As a result 25.000 jobs were

lost and a billion of dollars from the employees’ pensions were disappeared (Thomas,

2002).

Poor ethics and manipulations in accounting is not a new issue. In 1494, Luca Pacioli

published a book where the principles of double bookkeeping were explained. That is

why for many years double entry bookkeeping was widely known as “Italian

bookkeeping”. The UK’s accountants used the expression “true and fair view” since

1947 while the Australians have been using the “true and fair” state since 1974

(Bayou, et al., 2011).

Since then, ethical standards have tremendously risen. Accounting scandals and

manipulated accounting results continue to arise disregarding the strict legislation and

the Codes of Ethics. Enron’s scandal was followed by a series of similar incidents:

WorldCom: $3.8 billion fraud; bankruptcy

Xerox: $1.4 billion of accounting overstates profits

Qwest Communications: $34 billion assets cut

Health South: $1.4 billion fraud by false entries

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SK Global (South Korea): $2.1 billion overstates of earnings (Low, et al.,

2008).

Accountants have to deal with a number of ethical dilemmas. The “Association of

Certified Fraud Examiners” estimates that every firm in the United States loses about

6% of its annual revenues or $9 daily for every employee because of occupational

frauds (www.acfnet.com). The term occupational fraud denotes the exploitation of

someone’s work aiming to a personal enrichment through the intentional misuse of

the assets of the firm which he works. In accounting this is called creative accounting

(Amat, et al., 2004).

Even though a lot of different techniques are being used to avoid economic scandals

and their sequences, a lot of work needs to be done in order to promote truthfulness,

transparency and ethics.

2.2 The principle characteristics of accounting

As it is already mentioned above, information regarding the financial results of a

company should be trustworthy and free from bias. The International Federation of

Accountants (IFAC) aims to serve and promote public interest by enhancing the

accounting profession worldwide. IFAC recognizes the existing need as far as the

introduction of a globally harmonized framework so as to prevent frauds and

misunderstandings and has established the International Standards for Accountants.

According to it, there are four qualitative principles which financial information

should follow in order to be useful (Office of the Australian Accounting Standards

Board, 2008).

Understandability: This is a characteristic due to which every possible

stakeholder should be able to understand financial statements. Of course, this

presupposes that users have at least the minimum reasonable business and

economic knowledge background that enables them to judge what has been

already published. It should also be noted that preparers are not expected to

fulfill the statements and sacrifice or simplify the reports so as to make them

easily understood.

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Comparability: Stakeholders should be able to compare financial statements

not only through time but also make comparisons amongst reports of different

enterprises. Thus, measurements, transactions and events should be made in a

constant way. This helps them determine the best enterprise available to invest

is.

Relevance: Relevance, as a qualitative characteristic, has to do with financial

events, past, present of even future, which are easily estimated by users and

influence their decision-making process. Financial information may be

relevant because of its nature, its nature and magnitude, or because of its

magnitude in relation to its nature.

Reliability: Financial information should be measured reliable and be able to

represent all the transactions and events that took place in the company. This

is achieved only when all records are free from undue errors, bias and are

neutral (Kothari, et al., 2006).

2.3 Accounting manipulation and creative accounting

Accountants realize that every time there is the chance of an information asymmetry

between them and everyone concerned, it makes them guardians of the public interest.

Creative accounting is the process which accountants may use due to their knowledge

background, in order to manipulate the financial results of a firm. It is sometimes

referred to as “cooking the books”, or “financial engineering”, “earnings

management” or even “income smoothing” (Amat, et al., 1999).

There are several reasons which lead accountants to creative accounting. According to

Amat (1999), accountants tend to manipulate financial results in order to:

Smoothen incomes: It is generally preferred for companies to present a steady

growth of profits than a volatile sequence of variations. In cases where there is

the disability to present a healthy financial statement some companies tend to

follow an unorthodox procedure. During prosperity they present extremely

high reserves in order to improperly raise funds if needed so as to reduce

forecasts.

Make profits tie in to forecasts.

Distract attention from unwelcome news.

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Maintain or boost the share price so as the company seems to be less risky

than it may in fact be. This is immoral because it conceals evidence which is

related to the trading of the shares. In such cases, even conservative investors

may face risk.

Delay the release of information to the market (Amat, 1999).

It is believed that accountants have high moral standards. Though, this is not always

true; they learn how they should react in different situation during their lives.

Moreover, accountants who are proved to participate in economic scandals are people

with a common behavior. Carnegie (2010), presents the accountants’ traditional

stereotype as “honest, trustworthy, careful with money, painstaking, polite, reliable

and well-spoken” professionals. Though, apart from all these positive elements that

characterize a traditional accountant’s behavior, there are negative as well. The

traditional accountant is expected to be “boring, dull and colorless, excessively

fixated with money, pedantic, uncommercial and shabby”.

Accounting is by nature an ethically precarious profession. Businesses often try to

ignore as much costs as possible in order to present a better profitability. That is why

all professionals should have and continuously enhance their ethical awareness.

It is generally believed that at some period during everyone’s life ethics should be

taught. As far as the accountants concerned, a formal ethics program should first be

introduced at university’s curricula and should afterwards continue as training courses

at an organizational level too, in order to be effective. As accountants daily deal with

meeting businesses’ demands and prosperity, they should always be prepared to take

under consideration what is generally accepted to be ethical before acting. Businesses’

activities most of the times affect the whole society. Enron’s failure for example; not

only its employees had been affected but a wide range of investors as well (Boyce,

2008).

2.4 Ethics, Morals and dilemmas

The term “Ethics” is derived from the Greek word “Ethos” which means the way of

life. According to Merriam-Webster’s Dictionary, ethics is: “the principles of

conduct governing an individual or a profession: the discipline dealing with what is

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good or bad or right and wrong, or with moral duty and obligation; a particular theory

or system of moral values…” (http://www.merriam-webster.com/dictionary/ethics).

At this point it is necessary to make a distinction between normative and descriptive

ethics. When we talk about normative ethics we talk about what someone should do.

On the other hand, descriptive ethics illustrates the way people make moral decisions

(Armstrong, et al., 2003).

Morals are the values that separate right from wrong, good from bad. Even though it

is claimed that there is no right or wrong to most of the cases, societies enact informal

values which are encountered as “atypical laws” (Marnburg, 2003).

Dilemmas occur when a choice needs to be made between two different options. For

example, when a business faces bankruptcy there are usually two alternatives which

could be followed; either choose an illegal option which helps prevent the business

from going bankrupted or, do nothing and be ready to cope with all possible

consequences. It is clear that to talk about a dilemma both choices presented should

lead to unpleasant results (Stewart, 1996).

Business ethics is exactly the same as normal ethics, as it is a group of “rules”

according to which a business may act good or bad in a business environment.

Theoretically speaking, it is an easy process but in fact things are different as there is

no clear distinction between the two sides. Though, a business cannot exist without

ethics. Societies establish rules and laws which a business should follow in order to

achieve goals and be competitive. Moreover, every single business is responsible for

being fair, honest and profitable, not only for itself but to a group of parties as well;

employees, stakeholders, consumers and the community as whole. This is in fact

something more than a complex situation (Trevino, et al., 2004).

Accounting ethics on the other hand, is the applied field of philosophy that deals with

the systematic study of the relative values of the behavior of accountants, regarding

the accuracy or appropriate professional acts, the benevolence or not of the incentives

and objectives. In other words, accounting ethics focuses on the implicit of

accountants to ensure the quality of services provided and to protect the reputation of

their profession by serving all stakeholders. It is undoubted that ethics is of vital

importance for the accounting profession (Stewart, 1996).

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The need of ethics existence in the business world is of great importance as it

provides managers and employees a helpful guidance tool, a code of conduct, which

is capable to gain public’s trust. The code of ethics, as it is usually mentioned, is a

collection of rules which are created based on ethical values and beliefs and presents

what is generally accepted to be right or wrong. It is claimed to be a rather essential

means for the decision making process (Karaibrahimoglu, et al., 2009).

Information provided to public by the accountants should be honest and reliable. Each

accountant should bear in mind that not only is the client’s interest important but the

third parties’ and the publics as well. The obligations accountants have make them

responsible for the maintenance of the public confidence and requires self-

commitment to the profession. Thus, the purpose of ethics is to enforce professionals

follow a straight path, clear and common for everyone so as to promote transparency,

reliability and neutrality as far as the financial results concerned (Smith, 2003).

2.5 Philosophical approaches for moral issues

The study of the different philosophical theories regarding ethics gives useful advice

and a well-established background, for anyone interested in business ethics.

Philosophers have developed five different approaches which are commonly used to

deal with ethical issues; the utilitarian approach, the rights approach, the fairness or

justice approach, the common good approach and the virtue approach (Velasquez, et

al., 1996).

o The utilitarian approach: it is the theory which was conceived in the 19th

century by the British Jeremy Bentham, James Mill and John Stuart Mill. The

main idea of it has been the good of the total society accruing by an action and

not just a single individual’s or a small group’s. “Greatest good for the

greatest number”. According to Bentham, all the positive elements of a

decision could be summed up and when contrasted to the negative ones could

come to final conclusion (Stewart, 1996).

o The rights approach: it has its roots in Kant’s philosophy. According to it,

every person has the right to be free and independent, equal to everyone else.

Its main idea is that people should not be manipulated by anyone. It expresses

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those rights which must be protected by others in order to protect each

person’s life from the others.

o The fairness or justice approach: this approach has its root in Aristotle’s

allegation according to which “equals should be treated equally and unequals

unequally”. However, no one can claim that this could always be based on

fairness and integrity. There is always the possibility of favoritism and

discrimination (Velasquez, et al., 1996).

o The common good approach: according to this approach which was first

mentioned in ancient Greece by Aristotle and Plato, individuals’ good is

inextricably linked to the community’s good. Social policies, institutions and

environments are beneficial to all. Effective public safety is a good and typical

example. Individuals are treated as members of the same community so they

act bearing in mind a common beneficial.

o The virtue approach: the virtue approach to ethics claims that there are specific

ideals towards which an individual should endeavor. In order to discover them

and endorse them there should precede a thoughtful reflection on what kind of

person he/she become. Honesty, courage, fairness and integrity are examples

of virtues which can be adopted. It is believed that once a virtue is adopted, it

becomes a characteristic of the individual and it is unintentionally conscripted

when necessary. This is when a person becomes ethical (Rachel, et al., 2002).

Unlike utilitarianism and rights theory which are focused mainly on rules-

governing actions, virtue ethics concentrates on the fundamental character and

motivations of the individual (Mintz, 2006).

2.6 Ethical decision-making

It is important for accountants to think about ethical dilemmas and frauds in a global

way. Accounting as a profession has no borders. The financial results a Chinese

company would have, may impact investors’ activities in German for example. So, as

there are no more local issues, accountants should consider ethics twice before acting

(Boyce, 2004).

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The American Institute of Certified Public Accountants (AICPA) states that “In the

conduct of their obligations as professionals, members should exercise sensitive

professional and moral judgment, in all their activities” (AICPA, www.aicpa.org).

The decision making process is consisted of four different levels. The first and

perhaps the most basic level, is that which helps the individual act in order to satisfy

his/her psychological needs. There are also the group levels, the organizational levels

and the post-organizational decision-making levels. In its most basic sense, the

decision making process begins from an individual basis. Afterwards, people are

joined together to form a decision-making group.

a) Individuals’ decision-making

According to Maslow, people are motivated by the hierarchy of their needs or their

need for self-realization. The concept of prioritizing humans’ needs provides a useful

framework in order to understand individuals’ decision-making. It is clear that people

tend to prefer little information and they sometimes need a lot of time before the final

decision is made. Similarly, staff of a workplace is often reluctant to revise their

views on new information. In other words, they tend to give too much weight on

preliminary information and do not take account of any new data which may have

occurred (Heylighen, 1992).

b) The group decision-making

Groups’ decisions have an impact both on the organizational culture and the group as

a whole. The decision-making processes are not just some simple extensions and

processes of the procedures which characterize individuals’ decisions. Often, people

need to reconcile their desires in order to have a team consensus. Such a synthesis is

perhaps more applicable than a decision made by an individual. Of course, no one can

be absolutely sure that it is the best option available that would lead to the

organizational goals’ achievement (Whyte, et al., 1997).

c) The organizational decision-making

According to Alexis et al. (1967), the organizational decision-making reveals many of

the properties which are functionally similar with the individuals’ ones. There is

reliance in the sense that the strategic searches and the decisional rules are constantly

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modified. Such as individuals, organizations as well give priority to simple search

rules and are seeking to reduce stress when examining complex problems. Many

management researchers claim that “the organizational decision making is usually

badly structured, although it is an important aspect for the organization’s welfare”

(Shapira, 1997).

A recent research on the decision-making related to organizations has revealed that

senior managers often tend to gather information but do not finally use them. In fact,

managers seem to gather much information with little or no relevance with the

decision they are asked to make. Thus, it is common that the organizational leaders

often fail to lead to changes and are reluctant to implement innovations (Henderson, et

al., 2001).

d) Post-organizational decision making

This is the last level in the decision making process, where the production is extended

beyond the managerial process. The post-organization level includes the production

and the distribution of goods and services. Even though this level mainly focuses on

macroeconomic policies, the decision making process is relevant to that adopted at the

individual, group and organizational levels. The European Union, NATO and the

United Nations could be some of the most representative examples of post-

organizational decisions. The main feature among them is the existed rigidity during

the decision-making process, because of the different geopolitical influences which

are reflected within the framework (Ahrne, et al., 2005).

Each accountant makes ethical decisions in every aspect of the daily performance,

usually instinctively. Those decisions often arise from an innate desire to do the right

thing. The real challenge for an accountant is when high professional standards need

to be set and live up with them. Moreover, making the “right” decision, even this

would provoke a personal disadvantage, forms a situation difficult to be confronted

(www.carb.ie).

Listed below, there are three of the most commonly used methods of decision making.

They are commonly used as a tool in order to bring the theory of ethics into practice,

mainly in workshops or ethics courses. They provide participants some experience

related to ethical decision making.

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o The 5 Questions Game

When an accountant doubts whether he/she should undertake a particular action, the

Five Questions Game which was designed by Velasquez (1996), can be used. Even

though there are a lot of variations of this technique, the synthesis of the questions an

accountant usually follows, is as presented below:

i. Is it legal? (compliance interest)

ii. Is it the most beneficial choice for me, regarding the expenses? (utilitarianism)

iii. Is it fair, or is it violating the rights of others? (humans in focus)

iv. How would I feel if it was published on the newspaper my friends and

relatives are usually reading? (integrity)

v. What quality of character as far as the person that undertakes the action, does

it witness? (moral as a virtue) (Velasquez, 1996).

o Three-step strategy

The three-step method which was designed by White (2009) combines the

examination of the practical consequences an action may have (teleology), with the

evaluation of the action (deontology) (Thomas, 1993).

Analyze the actions Decision makingAnalyze the consequences

Fig.1: Resolving an ethical dilemma

Step 1: Analyze the consequences

Who is going to be helped by the action?

Who is going to be hurt?

Which are the possible benefits and harms created by the action?

What is the overview of the action in the long-term as well as in the short-

term?

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Step 2: Analyze the actions

When the first step of the strategy is over, the analysis of the action as a whole should

be made, avoiding as much as possible all consequences, good and bad. To manage

this, the actor should find answers to some of the following questions:

How does the action measure up against moral principles such as honesty,

fairness and quality?

Does the action “cross the line”? Is somebody’s rights affected?

In the case there is a conflict between different people’s rights, is there a way

to classify them according to their importance?

Step 3: Decision making

When both of the above presented steps are completed and the results are clear, it is

the time when a decision could be made (Thomas, 1993).

o Ethics decision tree

The most frequently used method for decision-making in the accounting profession is

the ethics decision tree, which was developed by AICPA. It is easily understood and

used, as the only thing that someone has to do is answering the given questions by

following the arrows.

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Fig 2: Ethics decision tree (AICPA, www.aicpa.org)

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2.7 Theoretical framework

Increased evidence of economic scandals and manipulations have lead to the

imperative of research as far as the decision making process is concerned. Since a

couple of decades ago the accounting profession has been implicated in an amount of

economic scandals (Enron, WorldCom, Xerox, Parmalat). Many researches have been

conducted in order to trace the main source which leads accountants to manipulations

(Alam, 1998; Keller et al., 2007; Bernardi and Bean, 2006), as well as to conclude

whether ethics can or cannot be taught (Bernardi and Bean, 2006; Karaibrahimoglu, et

al, 2009).

Most of the empirical research concerning accounting ethics aims to understand the

ways which enhance the cognitive moral capability of accountants; either they are

students or professionals. According to Kohlberg (1958), a cognitive moral capability

is the levels to which moral structures could be introduced in the moral decision-

making process. Kohlberg (1958), in extend to a previous research conducted by

Piaget in 1970, based his research on lifelong cognitive moral development. He

presented three levels of moral reasoning, stages which can be observed at a human’s

behavior when there is the intention to act ethically; the pre-conventional, the

conventional and the post-conventional level (Thorne, 2001).

At the pre-conventional level, an individual acts according to self-interest and

punishments which may confront in relation to the choices that are made.

Conventional conditions are specified by the social group and its rules. The third and

last presented level is the post-conventional, where individuals have such high levels

of conscience that they act according to universal fairness and prosperity. Kohlberg

insists that an individual’s moral development is usually developed up to the

conventional level (LaGrone, et al., 1996).

Kohlberg’s levels of moral development

LEVEL FOCUS ORIENTATION

MORAL

REASONING

DEFINED BY

Pre-conventional Self-interest Reward and External authority

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punishment

Conventional Community Law and order Social group

Post-conventional Universal fairness Principles Inner conscience

Fig. 3: Kohlberg’s levels of moral development (Thorne, 2001, pp. 105)

Based on Kohlberg’s moral reasoning, Rest (1986) conducted a research in order to

rank the latter theory. He introduced a four-component model according to which

when an individual is to follow a moral behavior those four steps should probably be

presented; these are identification of an ethical dilemma, ethical judgment, intention

to act ethically, ethical action (Sweeney, et al., 2007).

Fig.4: Rest’s model of ethical action (Sweeney, et al., 2007, pp. 76)

His intention was to answer the following question: “When a person is behaving

morally, what must we suppose has happened psychologically to produce that

behavior?” (Wittmer, 2001). According to the elements of the model which was

developed, the following assumptions can be made: during the first stage, the person

involved, has for the first time the awareness that the current action may influence

other peoples’ lives. A dilemma whether he/she should continue acting or not must

occur. As soon as the dilemma is identified, an ethical judgment of the consequences

comes and it is then that the individual has to take a decision about the actions which

are going to follow. Therefore, he/she should formulate whether there should be an

ethical or unethical action. This stage is perhaps the most significant among all, as

according to the intentions the individual have, the final behavior is going to be

adjusted. Rest claimed that each stage of the model is separated from the others. So a

success in one stage does not necessarily mean a success on the other stages of the

model. It is noteworthy that the second stage of the model, the moral judgment, is

based on Kohlberg’s model (Cohen, et al., 2005).

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In 1991, Thomas Jones made a significant note in regard to ethical decision making.

He added moral intensity as one of the characteristics of the process. He defined

moral intensity as “a construct that captures the extend of issue-related moral

imperative in a situation”. He moreover claimed that “moral intensity is likely to vary

imperative in a situation substantially from issue to issue, with a few issues achieving

high levels and many issues achieving low levels” (Sweeney et al., 2007).

Fig. 5: The Jones’ model (Brandon et al., 2007, pp. 62)

He based his research on Rest’s model and recognized the following six

characteristics which according to him influence the ethical decision-making process:

Magnitude of consequences: refers to the amount of either harms or benefits

an action may result. For instance, as far as the financial reporting is

concerned, an error, whether it is unconscious or not, may lead to a variety of

circumstances. It is mostly often to have a greater moral intensity when the

action may result in a greater magnitude of consequences.

Social consensus: it is the rate that calculates the social degree that an action is

generally accepted to be right or wrong. When there is the possibility of

violation of standards, professional or legal for example, the social consensus

is higher.

Probability of effect: refers to the possibility that the action discussed will

result negatively. The greater the probability of the possible harm the greater

the moral intensity.

Temporal immediacy: refers to the period of time which exists between the

action and its consequences. Temporal immediacy and moral intensity are

20

terms inversely proportional. The longest the period of time needed the lowest

the moral intensity of the issue.

Proximity: refers to the closeness the individual feels among him/her and the

people who are going to deal with the consequences of the action. The closest

the affinity between the individual and the “victim” the higher the moral

intensity.

Concentration of effect: according to this last characteristic which Jones sets,

an individual thinks that actions with concentrated effects lead to high moral

intensity (Brandon, et al., 2007).

Based on Kohlberg’s research as well, Ponemon (1993) suggested a connecting

link between moral development and an accountant’s respect and compliance with

the professional standards. They achieved this by using the levels of moral

reasoning Kohlberg had introduced. Particularly, they stated that when an

accountant’s moral reasoning is at the pre-conventional level the intension to

follow professional standards has to do with personal interest. At the conventional

level, the significance of societal rules instead of punishment is the element that

makes an accountant to behave according to the professional standards. Finally, at

the post-conventional level an accountant is mature enough to decide by himself

about the moral principles and rules which need to be used so as to follow the

profession’s code of ethics (Jeffrey, et al., 2004).

In 2001 Thorne integrated Rest’s model and proposed one, due to which moral

development in accordance to virtues are both required to conclude to an ethical

behavior. As it is presented in figure 4, moral development is consisted of

sensitivity in order to identify a dilemma and prescriptive reasoning in order to be

able to ethically judge a dilemma. Likewise, virtue is consisted of ethical

motivation which is of vital importance and so as that an individual intents to

leave aside his/her personal welfare and claim that others benefits are of greater

significance. According to Thorne, “the integrative perspective suggests that an

individual’ ethical character is a reflection of his or her instrumental virtue”

(Armstrong, et al., 2003).

21

Fig. 6: Thorne’s model (Armstrong, et al., 2003, pp. 3)

2.8 Academic and workplace ethical training

After years of research the academic community has concluded that it is indeed

possible to teach ethics effectively. No human being is born with an innate desire and

intention to act ethically. The first social groups that an individual joins, family and

school normally, teach him/her how to endorse an ethical behavior. In accounting,

choosing among two options where the one is supposed to be the most ethical is not

always an easy process. For that, business men and women are expected to act

according to a code of conduct that enables them include public interest in their

services (Smith, 2003).

Business ethics education was first applied in USA in 1974, while in Australia the

first conversations about the subject came later. In the late 1980s some unexpected

events shook the Australian community and it was then that ethics education was

firstly introduced. UK’s educational system followed the steps of Australia’s a couple

of year later while on the other hand the Swedish incorporated ethics courses in their

universities just when the new millennium began (Svensson, et al., 2008).

Education can influence ethical behavior. Needless to say that it would be

meaningless if the opposite happened as the role of an educational system is to

influence and shape students’ values (Boyce, 2008). Of course, as it is usual when

dealing with such a sensitive issue, a debate exists. According to Haywood (2009), it

is quiet difficult and “dangerous” teaching university-students ethical theories as they

22

may misunderstand them and be left with the false impression that what is once

judged as unethical would always be justifiable. This is because, students often lack

of professional experience and knowledge of professional responsibilities (Haywood,

et al., 2009). However, Armstrong (2003) insists that “exposing students to ethical

theories might help them recognize those theories when they encounter them, often as

underlying assumptions, in heir coursework” (Armstrong, et al., 2003).

On the other hand, in 2008 Low claimed that ethics education has the power to play

such a crucial role in financial scandals and ethical dilemmas in the workplace that

unless there is a substantial change in education, business world will continue to face

danger. It is moreover explained that not only an instillation of what is claimed to be

ethical should accounting education achieve but, a thorough examination of the

character an accountant requires to beat in order to behave ethically (Low, et al.,

2008).

According to Bernardi (2006), ethics in-class courses are not treated by students as

they should. It lies on the student’s intention to develop their personal code of conduct

whether the program would be effective or not. Based on a survey conducted in a

private business school in New York, students tend to think of ethics courses as a

mere guide which in most cases is ignored (Bernardi, 2006).

Bowden (2008) insists that even though an ethics course cannot guarantee the success

that was set at the beginning, it is proved that students, who have attended at least

once a course, were found to have gained the following changes:

Improved self-knowledge

Improved moral cognition

Knowledge of their legal, ethical and professional responsibilities

Capability to understand the existence of multiple pathways to address a single

ethical dilemma (Bowden, 2008).

What is described above is not a singularly presented incident. It is already mentioned

that while students at university are ready and should come across to ethics issues,

they are not usually capable to totally understand how it would be to apply theory to a

real business environment. For that reason ethics training should be addressed both in

academia and the workplace (Boyce, 2008).

23

Research suggests that formal ethics courses in the workplace can have positive

impact on the employees’ behavior. A formal ethics program includes written

standards of conduct that are communicated to all employees, ethics training, ethics

advice lines and systems for anonymous reporting of frauds and other unethical

activities. According to a research conducted in organizations which had applied

formal ethics programs, 78% of their employees were positive to report misconducts

to management. On the contrary, only a percentage of 50% of the employees who

worked in organizations with no ethics courses applied, answered that they would

report misconducts to management (Trevino, et al., 2004).

Training employees offers the privilege of anticipating frauds. It is more usual to

discover frauds through the internal control; when it is already late enough. Well-

trained employees are receptive in protecting their company. They are ready to

communicate suspicious activities and reduce frauds (Strand, et al., 2002).

Abdolmohammadi (2009) clarifies that according to studies of ethical reasoning

accountants, both students and professionals were found to have lower levels of

ethical reasoning than others which have participated in the same survey. Taking into

consideration Rest’s conclusions that ethical reasoning varies according to age and

educational level it could be assumed that ethical training is indeed crucial. It

obviously has a catalytic effect on employees’ ethical reasoning and on the

profession’s survival (Abdolmohammadi, et al., 2009).

In 2000, Warth interviewed seventeen CPA (Certified Public Accountants) firms in

order to examine what they thought about ethics, education and training. All meetings

were conducted with management level executives. He asserted that even though

executives agreed that ethics is essential for the welfare of every business, they did

not manage to incorporate training. What is more, they all, apart from one, claimed

that ethics education which was gained in college was the only one on which they

relied. Finally, it was disappointing realizing that even though there were

dissatisfaction from the clients’ side as for the levels of ethics, firms did not still think

of incorporating relevant courses (Warth, 2000).

Comparing Warth’s research with Clement’s, it could be said that the need of

incorporating ethics training in companies is obvious. Particularly, when top

management seems to endorse and applaud ethics programs the effectiveness of them

24

increases rapidly. Rewarding ethical behavior and emphasizing on the importance of

it can make the adoption of ethics an easier process than it is considered (Clement,

2006).

25

3. Methodological Approach

In the previous chapter a literature review of ethics was made, and more specifically a

focused review related to the accountants’ ethical decision making. This section aims

to present the research approach used, the ethical issues as well as the difficulties that

were presented. There is also a presentation of the research questions and hypotheses

of this current essay.

In researches conducted using a questionnaire as an instrument, the validity and the

appropriateness of them play a crucial role. In order to ensure those elements of the

surveys, the content and the construct validity as well as reliability should always be

checked.

Content Validity: it is the most important and commonly used type of validity. It is a

logical process where connections between the test items and the tasks exist. In order

to be able to ensure content validity Kim et al. (2008) proposed a literature review

regarding the subject of the study, a pilot test in a panel of experts and a sample of

respondents, different from the sample used to check the pilot tests.

Construct Validity: it is the assumption referred to the degree of confidence that the

underlying constructs which are measured demonstrate the activities. Exploratory

factor analysis and confirmatory factor analysis are the two most frequently used

methods which assess the undimentionality of a measure. The exploratory factor

analysis is used to decrease the number of original variables and summarize the

information contained (Cao, et al., 2005).

3.1Rationale

In the literature review presented above, some important issues regarding the

significance of ethics in the accounting profession and the way accountants manage

ethical dilemmas, have been raised. This research aims to explore the importance of

ethics training in the accounting profession. It also aims to examine possible

differences between those accountants who have at least once participated in an ethics

course and others who have never had the chance to participate in one, and their

tendency to cope with ethical dilemmas.

26

This research is based on two studies completed by Marnburg (2003) and Keller et al.

(2007) respectively. Researchers examined the importance and the affect ethics

courses had in business education as well as the factors that seem to affect a person’s

ethical perspectives. In this respect three hypotheses have been developed for the

current research and the methodological approach was developed in such a way so as

to address and test these hypotheses.

3.2 Hypotheses

As we have mentioned in the previous chapter the objectives of this research are to

explore the importance of ethics training in the accounting profession and the way

ethical dilemmas are treated. Four factors have been identified in order to examine the

importance or ethics education and are analyzed below; moral intensity, identification

of an ethical dilemma, ethics education and moral intention (Sweeney, et al., 2007).

H1: Accountants who have taken at least once a course in ethics will have more

knowledge in the field than those who have never taken such a course.

H2: Accountants who have taken a course in ethics will have better moral reasoning

ability than accountants with poor knowledge of ethics.

H3: Accountants who have at least taken once a course in ethics will have, due to

moral recognition abilities, awareness and emotional engagement, stronger ethical

attitudes and make more correct decisions than accountants with a poor knowledge of

ethics.

The figure below depicts the conceptual model of this research.

27

Identification of

ethical dilemmaEthical Judgment

Intention to act

ethicallyEthical action

H1 H3H2

Fig. 7: Research model

According to Rest (1986), an individual proceeds four steps before he/she finally

decides to act ethically or not. In the first stage, the individual recognizes that the

actions he/she intents to do affects the welfare of others. As soon as the dilemma is

identified, the actor has to judge the future results which are going to occur and based

on the alternatives which have occurred at the previous stage he/she formulates the

intention to act ethically. When all those stages are completed the individual is ready

to carry out the ethical action (Sweeney, et al., 2007).

3.3 Question generation

The methodological approach employed quantitative research paradigms. To

investigate the perceived relevance and the importance of the factors a sample survey

of accountants was conducted. All data were collected using questionnaires and data

mining through the internet. According to Brennan (1998), “questionnaires are a

convenient way of obtaining views of large numbers of individuals quickly and

economically”. The five part questionnaire was designed aiming to find out whether

accountants’ perceived ethics education to be important and to what extent education

could influence their behavior in an ethical dilemma. The survey was conducted

during the spring of 2011, the questionnaires were sent out in May, with one follow

up reminder. The average time required to complete the questionnaire is estimated to

be 8 minutes.

The research interview questions were constructed based on the issues that were

raised in the literature review. The first part of the questionnaire was designed so as to

collect demographic information (e.g. age, educational institute of graduation, year of

graduation).

28

The second part was designed to evaluate the educational background of the

accountants and included questions about the accounting courses they had already

participated. Also, information regarding their view on the Code of ethics established

by IFAC was gathered on that part.

The third part of the questionnaire was consisted of questions designed to identify the

respondents’ beliefs about ethical dilemmas. Four ethical case-statements were

designed and the respondents’ were asked to choose among some given answers,

based on how they perceived themselves acting in a situation. As ethics is an issue

which needs a specific treatment, the third part of the questionnaire consisted of two

scales. In the second scale, the accountants were asked to give answers regarding how

their colleagues would act. This part of the questionnaire was designed in such a way

in order to check both the respondents’ intentions to act ethically and secondly their

beliefs according to their peers’ intentions. Any potential difference among the two

parts of its statement would be of great interest.

The fourth part of the questionnaire examined accountants’ ethical judgment.

Participants assessed their rate of agreement for each of the four ethical issues.

Finally, in the fifth part of the questionnaire, the variable of moral intention was

examined using three issues. As it was done in the previous section, participants were

asked to assess their rate of agreement using on a 5-point Likert scale, anchored from

“strongly agree” to “strongly disagree”.

3.4. Participants

The population of the current survey was defined by the list of all the members of the

Economic Chamber of the region of East Greece. According to the Economic

Chamber the number of them rises to 1603 active members. The questionnaire was

uploaded on the internet and the link was e-mailed to the population, accompanied by

a cover letter which explained the purpose of the research. The measures that would

be taken to assure the anonymity of the participants were also presented. This resulted

in 170 completed questionnaires, a response rate of 10.6%.

29

4. Results & Discussion

4.1 Demographic characteristics

The current chapter presents the research findings occurred from the SPSS analysis.

After having selected all the completed questionnaires the demographic

characteristics of the sample were identified. Table 4.1 demonstrates a summarized

overview of them. As it is shown, women outnumber men. The research sample is

consisted of 170 individuals; 91 of them were females while 79 were males.

Gender

Frequency Percent Valid Percent

Cumulative

Percent

Valid Female 91 53.5 53.5 53.5

Male 79 46.5 46.5 100.0

Total 170 100.0 100.0

Table 4.1: Demographic Characteristics of the Sample

Among the examined sample, only 62 of the individuals admitted that they have never

attended an ethics course since the date the questionnaires were submitted. Thus,

36.5% of the individuals were not ethics educated while the majority of the

respondents, a percentage of 63.5%, have at least once attended an ethics course in

their life.

Table 4.2 is of great importance, as it is going to be used in order to deduct results

related to the hypotheses presented in the previous chapter. Findings which have

accrued from the statistical analysis made follow.

Ethics educated or not


Cumulative

Percent

Valid Non ethics educated 62 36.5 36.5 36.5

Ethics educated 108 63.5 63.5 100.0

Total 170 100.0 100.0

Table 4.2: Ethics educated or not

30

4.2 Sampling adequacy

As it is already mentioned, 1603 questionnaires were contributed to all active

members of the Economic Chamber of the region of East Greece. Finally, 170 valid

questionnaires were returned for statistical analysis. Even though the population of the

research was informed via an e-mail about the purpose of the survey only 10.6% of

them participated in it.

The table below (Table 4.3) shows the sampling adequacy measures extracted from

the factor analysis conducted. The Kaiser-Meyer-Olkin measure is used to examine

the partial correlation of the variables while the Bartlett’s Test of Sphericity is used to

identify whether the factors which have occurred are appropriate for analysis (Pallant,

2001). The factor analysis applied in the sample of the current survey showed that

both measures are acceptable. According to table 4.3 the KMO measure is .866

(higher than the 0.5 required for a satisfactory factor analysis) and the significance

level of Bartlett’s test of Sphericity is .000 (less than .005 required to prove that the

correlation matrix is not an identical matrix).

Kaiser-Meyer-Olkin Measure of Sampling

Adequacy.

.866

Bartlett's Test of

Sphericity

Approx. Chi-Square 1029.383

df 55

Sig. .000

Table 4.3: Sampling adequacy

4.3 Factor analysis

Since the sample is proven to be suitable for statistical analysis, a confirmatory factor

analysis was conducted in order to examine the loadings of the factors examined in

the questionnaire. The method used was the principle component analysis. It was

known from the beginning that four factors should be extracted. So, the extracted

factors were named according to the variables of the research model presented in the

previous chapter. The factors Ethics education (EE), Identification of dilemma (ID),

Ethical judgment (EJ) and Moral intensity (MI) and their loadings are presented in

table 4.4, given below.

31

FACTORS 1 2 3 4

EE .839

ID .743

ID .911

ID .807

ID .859

EJ .654

EJ .620

EJ .893

EJ .688

MI .688

MI .741

Table 4.4: Factor Loadings

4.4 Results

It was hypothesized (in H1) that accountants who had taken a course in ethics during

their university studies or even as a seminar/workshop after having completed their

studies, should have a better perspective as far as ethics is concerned. An Anova test

gave F(805.886) and Sig.=.000. Taking those outcomes into consideration, the Ho

was rejected.

Ethics educated or not Mean Std. Deviation

Non ethics educated .44 .500

Ethics educated 3.21 .670

Total 2.20 1.474

Table 4.5: Ethics knowledge

In H2 it was hypothesized that accountants who have taken at least a course in

ethics will have better moral reasoning ability than accountants with poor

knowledge of ethics. An Anova test was conducted for all the vignettes presented

32

in the questionnaire, related to this hypothesis. The findings accrued showed that

ethics educated accountants have indeed a better moral reasoning ability. The

testing gave Sig.=.000, apart for one of the four vignettes examined. As far as the

statement that asked accountants about their perspective regarding the relation

between accounting and truthfulness, the Anova test showed that no difference

exists between the ethics and non ethics educated accountants.

F Sig.

I take into account the impact the

decision will have on the people

affected, and choose what seems to be

right for most of them. * Ethics

educated or not

117.464 .000

Accounting and ethics are not related. *


15.719 .000

As an accountant I derive to rarely if

ever be confronted with ethical

questions. Accounting is about truth not

ethics. * Ethics educated or not

.613 .435

What is best for the greatest number of

people is ethical. * Ethics educated or

not

188.443 .000

Table 4.6: Anova analysis for moral reasoning

H3 hypothesized that accountants who have at least taken once a course in ethics will

have stronger ethical attitudes and make more correct decisions than accountants with

a poor knowledge of ethics. Two vignettes were given. According to the Anova

analysis the Ho was rejected as both statements gave Sig. equal to .000.

F Sig.

My ethical judgment is based on what is

good for me. * Ethics educated or not

162.946 .000

What is best for me is what I always

choose. * Ethics educated or not

337.877 .000

Table 4.7: Anova analysis-Ethical attitude

Apart from examining the significance of the presented hypothesis, the researcher

aimed to identify any possible difference among the answers given in the third

section of the questionnaire. The findings from the tables presented below, show

an element of hypocrisy. While accountants support that they would, in the

33

majority of the cases, act ethically even if that would controvert their personal

interest they believe that others would not. Specifically, looking at Table 4.8

shows a great difference among the responses. This difference could be explained

as an attempt of the sample to preserve itself. While 63.5% of the individuals

answer that they would act in the most ethical way, they believe that the majority

of their colleagues would fall into the trap and would inform their surroundings.

The same trend was also followed for every question examining that. Four tables

follow, presenting those findings.

If you had an inhouse information that the stock price of the X firm, which is a

client of yours is going to rise for 100%, what would you do?

Personal response

Accountants’ perception

of how they think their

colleagues would

respond

Frequency Percent Frequency Percent

Valid I would do nothing; it

is illegal to take

advantage of such

situation.

108 63.5 15 8.8

I would take a loan in

order to buy as many

shares as possible.

19 11.2 57 33.5

I would inform all my

close friends and

relatives.

35 20.6 63 37.1

I would spread news

that the firm is

insolvent and ready to

go bankrupt.

8 4.7 35 20.6

Total 170 100.0 170 100.0


34

A client of yours has bought a 120.000 euro pleasure boat and asks you to treat

the purchase so that they can claim a depreciation allowances. Would you

disagree and be prepared to lose that client's business?

Personal response

Accountants’

perception of how

they think their

colleagues would

respond


Valid Definitely yes 80 47.1 27 15.9

I am not sure 59 34.7 92 54.1

Definitely no 31 18.2 51 30.0

Total 170 100.0 170 100.0


During the last two years you own stocks of the firm X, which is going to be your

client from the new financial year. What do you do?

Personal response

Accountants’

perception of how they

think their colleagues

would respond


Valid Nothing. I owned the

stocks before the

collaboration.

41 24.1 89 52.4

I am transferring the

stocks to one of my

family members.

34 20.0 69 40.6

I decide to sell the

stocks at the open, even

if this would mean that

I would lose money.

95 55.9 12 7.1

Total 170 100.0 170 100.0


35

One of your partners confesses that he rarely smokes marijuana. What do you

do?

Personal response

Accountants’

perception of how

they think their

colleagues would

respond


Valid Nothing. If it is out of the

working hours it does not

bother me.

102 60.0 55 32.4

I try to persuade him that

it is a dangerous and

unhealthy habit.

42 24.7 49 28.8

I immediately call the

police.

46 15.3 66 38.8

Total 170 100.0 170 100.0


36

5. Conclusions

The current research was an attempt to examine the ethical standards of the

accountants based in the region of East Greece. The identification of ethical

dilemmas, ethical judgment and the accountants’ ethical intention were also explored,

in an attempt to give explanations regarding accounting scandals. The study has

identified some areas which need further research.

The first thing that should be discussed is the significantly higher perception of ethics

of the accountants who have at least once attended an ethics course when compared to

those who have never done. This is a remarkable result considering that apart from the

differences presented at the educational background the population covers age groups

from 24 to 60. Even though the different working experiences and stimuli the

individuals had, ethics courses seem to influence their attitudes.

It was also hypothesized that accountants who have taken a course in ethics will have

better moral reasoning ability than accountants with poor knowledge of ethics. While

the moral reasoning of each person is shaped according to many elements (i.e

lifestyle, family, genuine inclinations etc.) the research show that ethics courses play a

crucial role as well.

Finally, according to the findings it is proven that accountants who have at least taken

once a course in ethics have stronger ethical attitudes and make more correct

decisions than accountants with a poor knowledge of ethics.

Good knowledge of ethics seems to explain significantly higher moral reasoning

abilities and ethical attitudes. Though, it should be noted that the results provoked

from the third part of the questionnaire show some kind of hypocrisy. No matter the

accountants ethics background a clear difference among the responses given is

presented. While the great majority of the sample insists that they would act ethically

even though this would controvert their interest, they on the other hand support that

their colleagues would not. This may show a hesitation or even a prejudice as far as

the possible effects their responses may have on their image.

The research has the following limitations:

37

The selection of the population of the survey contained only active members

of the Economic Chamber of East Greece. A research using all the accountants

registered in the Greek Economic Chamber would give useful results for the

profession. What is more, a comparison of the findings with those of other

European countries may seem interesting.

Due to time pressure there was not given the opportunity to the researcher of

working closer with the sample. It would be very interesting organizing a

course as part of the survey so as to educate the professionals and afterwards

providing them with the questionnaire. Any possible difference at the findings

would be significant.

Perceptions are variables which may change over time. So, it would be

interesting to schedule a second round of the same survey.

Finally, more variables could be added in a future research in order to enhance

it.

38

APPENDICES A

Questionnaire

General information

1. Gender

a. Female

b. Male

2. Type of the educational institute you graduated:

a. Greek University-AEI

b. Technological Educational Institute-TEI

c. Foreign country university

d. Other (i.e. Institute of professional training, Lyceum, etc.)

3. Year of graduation:

a. 1970-1980

b. 1981-1990

c. 1991-2000

d. 2001-…..

Ethics education

4. Have you ever attended any ethics course during your university studies?

a. Yes

b. No

5. After completing your university studies, have you ever attended any

course/workshop related to ethics?

a. Yes

b. No

6. Evaluate the following statement: “Business ethics should be a core university

course for every profession related to financial and economic issues’’.

a. Strongly disagree

b. Disagree

39

c. Neutral

d. Agree

e. Strongly agree

7. How well do you know the Code of Ethics for the Accountants, established by

the International Federation of Accountants (IFAC)?

a. It is the first time I hear about it

b. I know it but I have a lot of queries

c. Neutral

d. Very good

e. Almost perfect

8. Evaluate the following statement: “I frequently use the Accountant’s Code of

Ethics in order to handle with difficult situation while working’’.


b. Disagree

c. Neutral

d. Agree

e. Strongly agree

9. Evaluate the following statement: “Most of the accountants have studied for

about 5 years, so lifelong learning is not essential.”


b. Disagree

c. Neutral

d. Agree

e. Strongly agree

Identification of an ethical dilemma

In questions 10-13 give your answers according to your beliefs and your

perspectives regarding the answers your colleagues may give.

40

No Questions Your response Response your colleagues would give

10 If you had in-house information that

the stock price of the X firm, which is

a client of yours, is going to rise for

100%. What would you do?

a. I would do nothing; it is

illegal to take advantage

of such situation

b. I would take a loan in

order to buy as many

shares as possible

c. I would inform all my

close friends and relatives

d. I would spread news that

the firm is insolvent and

ready to go bankrupt

10.1

a. They would do nothing; it is illegal to

take advantage of such situation

b. They would take a loan in order to buy

as many shares as possible

c. They would inform all their close

friends and relatives

d. They would spread news that the firm is

insolvent and ready to go bankrupt

11.

A client has bought a €120.000

pleasure boat and instructs you to

treat the purchase so that they can

claim a depreciation allowances.

Would you disagree and be prepared

to lose that client’s business?

a. Definitely yes

b. I am not sure

c. Definitely no

11.1

a. Definitely yes

b. I am not sure

c. Definitely no

41

12. During the last 2 years you own stock

of the firm X, which is going to be

your client from the new financial

year. What do you do?

a. Nothing. I owned the

stocks before the

collaboration

b. I am transferring the

stocks to one of my

family members

c. I decide to sell the stocks

at the open market, even

if that would mean that I

would lose money.

12.1

a. Nothing. They owned the stocks before

the collaboration

d. They are going to transfer the stocks to

one of his family members

e. They decide to sell the stocks at the

open market, even if that would mean

that I would lose money.

13. One of your partners confesses that he

rarely smokes marijuana. What do

you do?

a. Nothing. If it is out of

working hours, it does not

bother me

b. I try to persuade him that

it is a dangerous and

unhealthy habit

c. I immediately call the

police

13.1

a. Nothing. If it is out of working hours, it

does not bother them

b. They try to persuade him that it is a

dangerous and unhealthy habit

c. They immediately call the police

42

To what extend do you agree or disagree that you use the following approaches in resolving ethical dilemmas?

Ethical judgment

14. I take into consideration the impact the decision will have on the people affected, and choose what seems to be right for most of them.

1 = Strongly agree 2 = Agree 3 = Neutral 4 = Disagree 5 = Strongly disagree

15. Accounting and ethics are not related.


16. As an accountant I derive to rarely if ever be confronted with ethical questions. Accounting is about truth not ethics.


17. What is best for the greatest number of people is ethical.


43

Moral intention

18. My ethical judgment is based on what is good for me.


19. What is best for me is what I will always choose.


44

APPENDICES B

Demographic characteristics

Gender


Cumulative

Percent

Valid Female 91 53.5 53.5 53.5

Male 79 46.5 46.5 100.0

Total 170 100.0 100.0

Type of educational institute you graduated


Cumulative

Percent

Valid Greek University-AEI 69 40.6 40.6 40.6

Technological Educational

Institute-TEI

56 32.9 32.9 73.5

Foreign country university 14 8.2 8.2 81.8

Other (i.e Institute of

Professionla Training,

Lyceum, etc)

31 18.2 18.2 100.0

Total 170 100.0 100.0

Year of graduation


Cumulative

Percent

Valid 1970-1980 37 21.8 21.8 21.8

1981-1990 38 22.4 22.4 44.1

1991-2000 39 22.9 22.9 67.1

2001-... 56 32.9 32.9 100.0

Total 170 100.0 100.0

45



Cumulative

Percent

Valid Non ethics educated 62 36.5 36.5 36.5

Ethics educated 108 63.5 63.5 100.0

Total 170 100.0 100.0

Factor Analysis

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .866

Bartlett's Test of Sphericity Approx. Chi-Square 1029.383

df 55

Sig. .000

46

Total Variance Explained

Compon

ent

Initial Eigenvalues Extraction Sums of Squared Loadings Rotation Sums of Squared Loadings

Total % of Variance Cumulative % Total % of Variance Cumulative % Total % of Variance Cumulative %

1 5.249 47.721 47.721 5.249 47.721 47.721 4.000 36.364 36.364

2 1.293 11.754 59.475 1.293 11.754 59.475 1.449 13.173 49.537

3 .843 7.664 67.139 .843 7.664 67.139 1.372 12.475 62.013

4 .774 7.040 74.178 .774 7.040 74.178 1.338 12.166 74.178

5 .669 6.082 80.260

6 .614 5.585 85.845

7 .588 5.343 91.188

8 .383 3.481 94.669

9 .340 3.089 97.757

10 .168 1.525 99.282

11 .079 .718 100.000

Extraction Method: Principal Component Analysis.

47

Rotated Component Matrixa

Component

1 2 3 4

Ethics educated or not .320 -.342 .839 -.013

If you had an inhouse

information that the stock

price of the X firm, which is a

client of yours is going to rise

for 100%, what would you

do? (Personal response)

.344 .743 .274 .016

A client of yours has bought

a 120.000 euro pleasure boat

and asks you to treat the

purchase so that they can

claim a depreciation

allowances. Would you

disagree and be prepared to

lose that client's business?

(Personal response)

-.274 .911 .009 -.067

During the last two years you

own stocks of the firm X,

which is going to be your

client from the new financial

year. What do you do?

(Personal response)

.127 .807 .074 .040

One of your partners

confesses that he rarely

smokes marijuana. What do

you do? (Personal response)

-.294 .859 -.002 .007

I take into account the impact

the decision will have on the

people affected, and choose

what seems to be right for

most of them.

.050 .162 .158 .654

Accounting and ethics are

not related.

.088 -.410 -.312 .620

As an accountant I derive to

rarely if ever be confronted

with ethical questions.

Accounting is about truth not

ethics.

.001 .128 .074 .893

48

What is best for the greatest

number of people is ethical.

.046 .173 .405 .688

My ethical judgment is based

o n what is good for me.

.688 -.325 -.105 .326

What is best for me is what I

always choose.

.741 -.335 -.239 .198


Rotation Method: Varimax with Kaiser Normalization.

a. Rotation converged in 6 iterations.

49

Component Transformation Matrix

Component 1 2 3 4

1 .846 -.380 -.351 .131

2 -.218 -.105 -.050 .969

3 .069 -.593 .803 -.008

4 .482 .703 .480 .209


Rotation Method: Varimax with Kaiser

Normalization.

ANOVA Table

Sum of Squares df Mean Square F Sig.

Ethical approach of

dilemmas * Ethics educated

or not

Between Groups (Combined) 303.856 1 303.856 805.886 .000

Within Groups 63.344 168 .377

Total 367.200 169

50

ANOVA Table


I take into account the impact

the decision will have on the

people affected, and choose

whatseems to be right for

most of them. * Ethics

educated or not


Within Groups 226.211 168 1.346

Total 384.376 169

Accounting and ethics are

not related. * Ethics educated

or not


Within Groups 242.619 167 1.453

Total 265.456 168

As an accountant I derive to

rarely if ever be confronted

with ethical questions.

Accounting is about truth not

ethics. * Ethics educated or

not

Between Groups (Combined) .776 1 .776 .613 .435

Within Groups 212.900 168 1.267

Total 213.676 169

What is best for the greatest

number of people is ethical. *




Total 233.888 169

51

ANOVA Table


My ethical judgment is based

on what is good for me. *




Total 284.524 169

What is best for me is what I

always choose. * Ethics

educated or not



Total 337.388 169

52

Frequencies 10-10.1

If you had an inhouse information that the stock price of the X firm, which is a client of yours

is going to rise for 100%, what would you do? (Personal response)


Cumulative

Percent

Valid I would do nothing; it is illegal

to take advantage of such

situation.

108 63.5 63.5 63.5

I would take a loan in order to

buy as many shares as

possible.

19 11.2 11.2 74.7

I would inform all my close

friends and relatives.

35 20.6 20.6 95.3

I would spread news that the

firm is insolvent and ready to

go bankrupt.

8 4.7 4.7 100.0

Total 170 100.0 100.0

If you had an inhouse information that the stock price of the X firm, which is a client of yours

is going to rise for 100%, what would you do? (Response your colleagues may give)


Cumulative

Percent

Valid I would do nothing; it is illegal

to take advantage of such

situation

15 8.8 8.8 8.8

I would take a loan in order to

buy as many shares as

possible

57 33.5 33.5 42.4

I would inform all my close

friends and relatives

63 37.1 37.1 79.4

I would spread news that the

firm is insolvent and ready to

do bankrupt

35 20.6 20.6 100.0

Total 170 100.0 100.0

53

Frequencies 11-11.1



disagree and be prepared to lose that client's business? (Personal response)


Cumulative

Percent

Valid Definetely yes 80 47.1 47.1 47.1

I am not sure 59 34.7 34.7 81.8

Definetely no 31 18.2 18.2 100.0

Total 170 100.0 100.0



disagree and be prepared to lose that client's business? (Response your

colleagues may give)


Cumulative

Percent

Valid Definetely yes 27 15.9 15.9 15.9

I am not sure 92 54.1 54.1 70.0

Definetely no 51 30.0 30.0 100.0

Total 170 100.0 100.0

54

Frequencies 12-12.1

During the last two years you own stocks of the firm X, which is going to be your client from

the new financial year. What do you do? (Personal response)


Cumulative

Percent

Valid Nothing. I owned the stocks

before the collaboration.

41 24.1 24.1 24.1

I am transferring the stocks

to one of my family members.

34 20.0 20.0 44.1

I decide to sell the stocks at

the open, even if this would

mean that I would lose

money.

95 55.9 55.9 100.0

Total 170 100.0 100.0

During the last two years you own stocks of the firm X, which is going to be your client from

the new financial year. What do you do? (Response your colleagues may give )


Cumulative

Percent

Valid Nothing. I owned the stocks

before the collaboration.

89 52.4 52.4 52.4

I am transferring the stocks

to one of my family members.

69 40.6 40.6 92.9

I decide to sell the stocks at

the open market, even if this

would mean that I would lose

money.

12 7.1 7.1 100.0

Total 170 100.0 100.0

55

Frequencies 13-13.1

One of your partners confesses that he rarely smokes marijuana. What do you do? (Personal

response)


Cumulative

Percent



bother me.

102 60.0 60.0 60.0

I try to persuade him that it is

a dangerous and unhealthy

habit.

42 24.7 24.7 84.7

I immediately call the police. 26 15.3 15.3 100.0

Total 170 100.0 100.0

One of your partners confesses that he rarely smokes marijuana. What do you do? (Response

your colleagues may give)


Cumulative

Percent



bother me.

55 32.4 32.4 32.4

I try to persuade him that it is

a dangerous and unhealthy

habit.

49 28.8 28.8 61.2

I immediately call the police. 66 38.8 38.8 100.0

Total 170 100.0 100.0

56

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