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For the Accounting Profession, Leadership Matters Regarding Ethical Climate Perceptions

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We tested the hypothesis advanced by Mannarelli (2006) and Early and Davenport (2010) that professional accounting organizations would benefit from a transformational leadership style. Eleven CPA firms were surveyed to test the correlative relationship between three perceived leadership styles (i.e., transformational, transactional, and passive-avoidant) and the workplace ethical climate (i.e., caring, law code, rules, instrumental, and independence). Using the Multifactor Leadership Questionnaire (Bass & Avolio, 2010) and the Ethical Climate Questionnaire (Victor & Cullen, 1988), data provided by 103 respondents showed that transformational leadership style is the most effective, transactional is not effective, and passive-avoidant leadership style is deleterious to subordinates' perception of the preferred ethical climates.
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Electronic copy available at: http://ssrn.com/abstract=2467091
FOR THE ACCOUNTING PROFESSION,
LEADERSHIP MATTERS REGARDING
ETHICAL CLIMATE PERCEPTIONS
Jeffrey N. Barnes, Southern Utah University, USA
David S. Christensen, Southern Utah University, USA
Tyler F. Stillman, Southern Utah University, USA
Keywords: Accounting Profession, Leadership, Ethical Climate,
Transformational Leadership
JEL: C30, L20, M40, Y10
Abstract
1
We tested the hypothesis advanced by Mannarelli
(2006) and Early and Davenport (2010) that
professional accounting organizations would benefit
from a transformational leadership style. Eleven CPA
firms were surveyed to test the correlative relationship
between three perceived leadership styles (i.e.,
transformational, transactional, and passive-avoidant)
and the workplace ethical climate (i.e., caring, law
code, rules, instrumental, and independence). Using
the Multifactor Leadership Questionnaire (Bass &
Avolio, 2010) and the Ethical Climate Questionnaire
(Victor & Cullen, 1988), data provided by 103
respondents showed that transformational leadership
style is the most effective, transactional is not
effective, and passive-avoidant leadership style is
deleterious to subordinates’ perception of the preferred
ethical climates.
1
Much of this material is from the principal author’s recent dissertation.
Electronic copy available at: http://ssrn.com/abstract=2467091
98 Barnes, Christensen, & Stillman: Accounting Leadership and Ethical Climate
INTRODUCTION
There are three leadership styles described in the full-range
leadership theory (FRLT): transformational, transactional, and
passive-avoidant leadership styles (Antonakis & House, 2002). The
transactional leadership style is most commonly recognized by
subordinates in the public accounting profession and the more
preferred leadership style is the transformational leadership style
(Early & Davenport, 2010). The least effective leadership style in
public accounting is the passive-avoidant leadership style (Barnes,
Christensen, & Stillman, 2013). The natural question arising from the
prior accounting leadership research is which of the leadership styles
might influence the positive ethical perceptions of the accounting
workplace environment. A brief discussion about the three major
leadership styles manifested under the FRLT follows.
Transactional Leadership vs. Transformational Leadership Style
Transactional leaders tend to create interpersonal relationships
through self-interest exchange transactions. In contrast,
transformational leaders use charisma, vision, and inspiration to
create strong leader/subordinate relationships (Bass, 1985).
Transactional leaders tend to operate more effectively in
environments characterized by stability and predictability, while the
transformational leaders operate better in environments characterized
by high degree of change or opportunities for change (De Hoogh, Den
Hartog, & Koopman, 2005). Transactional leaders move predictably
along a course of action, while transformation leaders operate
effectively in unpredictable and uncharted work environments. These
differences have implications for leader/subordinate relationships and
subordinate behavior. Transformational leaders demonstrate an ability
to motivate employees in a superior manner to that of transactional
leaders, such that subordinates, influenced by transactional leaders
focus on achieving consistent performance through rewards and
punishments, use of goals, and seek to resolve subordinate concerns
that could potentially affect performance (Bryant, 2003).
Transactional leaders are contract-based and micromanagers
of outcomes and believe subordinates can be motivated by contingent
Journal of Accounting, Ethics & Public Policy 99
Volume 15, No. 1 (2014)
rewards. Transactional leaders do not generally expect their
subordinates to achieve beyond initial expectations, nor deviate from
status quo procedures, nor provide creative recommendations (Jung,
2001). Transactional leaders are thought to be more apt to benefit
others when the act benefits them (i.e., leaders) (Kanungo, 2001).
Transformational leaders solicit members for teams that are
competent and respond to charismatic leadership traits, such as
inspiring motivation, visionary aspirations, or high collaborative work
ethic. Bass (1985) and Yukl (1995) emphasized, . . . that
transformational leaders broaden and elevate subordinates interest,
activate higher-order needs, and motivate subordinates to transcend
their own self-interests for the good of the organization, resulting in
performance beyond original expectations” (as cited in Viator, 2001,
p. 100). Transformational leaders influence and motivate their
subordinates by raising their subordinate’s expectations of
themselves, such that they can attain objectives previously thought
unattainable (Antonakis & House, 2002). The last leadership style,
passive-avoidant leadership, lacks these more positive leadership
traits, behaviors, and outcomes.
Passive-avoidant Leadership Style
Passive-avoidant style is a dimension of leadership marked by
disengagement from subordinates. As this is widely considered
inferior to both transactional and transformational leadership styles, it
is not necessary to provide a lengthy explanation of this leadership
style. Bass (1997) forcefully stated, “Transformational leadership
tends to be more effective and satisfying than contingent rewarding,
contingent rewarding is more effective and satisfying than managing
by exception, and managing by exception is more effective and
satisfying than passive-avoidant leadership” (p. 137). Passive-
avoidant leadership generally respond only when workplace crises
arise; promulgate the attitude, “if it ain’t broke, don’t fix it;” are
generally absent when needed, and postpone involvement regarding
urgent matters (Antonakis & House, 2002).
100 Barnes, Christensen, & Stillman: Accounting Leadership and Ethical
Climate
Leadership Styles in the Public Accounting Profession
An early accounting profession study identified attributes of
effective managing partners of CPA firms (McThomas, 1987). The
managing partners’ leadership traits were similar to the description of
the transformational leadership style, which described persons that
were communicative, people-oriented, honest, and loyal. The 2000
AICPA Vision Project emphasized the necessity for the “CPA to
develop the leadership skills necessary to influence, inspire, and
motivate others to achieve results” (Viator, 2001, p. 100). These
mentioned leadership skills or traits, leading to superior results, are
found in the transformational leadership style. Consequently,
Friedman, Langbert, and Giladi (2000) called for the accounting
profession in the United States to embrace the transformational
leadership style. In a nationwide survey by Viator (2001) the most
desired leadership style was transformational, while the actual
leadership style in place was transactional. Viator surveyed 416
AICPA members. He found that participants that worked in
nontraditional accounting services, such as information systems
assurance and business consulting, indicated that their immediate
leaders exhibited transformational leadership traits, more so than did
accounting firm personnel working in the traditional accounting firm
services of tax and audit. In a foreign related study, Mannarelli
(2006) described how the Chartered Accountants of Ireland teamed up
with INSEAD, a global leading business school, to help launch a
program of leadership training to instill the traits, skills, and behaviors
that are associated with transformational leadership.
Leadership and Ethics in the Accounting Profession
The AICPA’s CPA Horizons 2025 Report addresses both
leadership and ethics for the accounting profession (AICPA, 2013).
Leadership is identified as one of the profession’s core competency
and its top core value is integrity. The report further stated, “CPAs
must uphold the integrity of the profession and maintain high
standards in an ever changing environment and in cultures where
business practices differ from U.S. practices” (p. 5). The purpose of
the CPA’s integrity, objectivity, and commitment to excellence is to
Journal of Accounting, Ethics & Public Policy 101
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maintain the public’s trust. Leadership is defined in this Horizons
2025 Report as, “CPAs are adept at influencing, inspiring, and
motivating others to facilitate change and achieve excellence” (p. 18).
Rather than promote a particular leadership style, form, theory, or pre-
established leadership construct, the AICPA adds to this traits
description of leadership, in their Four Pillars of Effective
Leadership,
To lead effectively . . . you don’t [always] have the answers,
but you must have the capacity to work with others to find
them. Good leaders empower others by encouraging them to
see the talents and resources they bring to the table. If they
are seen as authentic and instill a genuine sense of trust, they
can enlist personal empowerment and commitment to drive
transformative change. To do this, leaders must emphasize the
four pillars of integrity, accountability, learning, and
communication. (AICPA, 2013b)
Effective leadership in the accounting profession appears
important for maintaining the public’s trust and fostering the
profession’s highest value, integrity. This study is interested in
focusing on whether a particular FRLT style (i.e., transformational,
transactional, or passive-avoidant) supports the AICPA’s CPA
Horizons 2025 Report’s leadership aspirations. Another study has
provided evidence that transformational leadership increases the
subordinates’ perception that their leader inspires greater workplace
efficiency, effectiveness, and subordinate satisfaction (Barnes,
Christensen, & Stillman, 2013); however, can transformational
leadership also inspire collegial integrity or a sense of importance to
the workplace ethical climate? The present investigation sought to
test this hypothesis.
Ethical Climate Type Perceptions
A validated and reliable model for workplace ethical climates
is presented by Victor and Cullen’s (1987) seminal research. The
conceptual model for Victor and Cullen consists of nine possible
ethical climate types, created by the logical association between three
ethical criteria (i.e., egoism, benevolence, and principle) to the three
102 Barnes, Christensen, & Stillman: Accounting Leadership and Ethical
Climate
locus-of-analysis criteria (i.e., individual, local, and cosmopolitan).
After factor analysis and other confirmatory meta-analyses, five
empirically derived workplace ethical climate types have emerged.
From Martin and Cullen’s (2006) meta-analysis, the five empirically
derived workplace ethical climate types, that have remained stable
since the theory’s inception, are shown in Table 1.
TABLE 1, Five Common Empirical Derivatives
of Ethical Climate Theory
Locus of
Analysis
Local
Cosmopolitan
Egoism
Instrumental
Instrumental
Caring
Ethical
Criteria
Benevolence
Caring
Caring
Caring
Principle
Independence
Rules
Lawcode
Source: Adapted from Martin and Cullen, 2006, p. 178.
An ethical climate research study for public accounting
indicated correlative relationships between ethical climate perceptions
and subordinate decision making (Buchan, 2005). An Asian study,
Venezia, Venezia, and Hung (2010) demonstrated differing ethical
climate perceptions between public and private Asian accountants. In
an American study, Bobek, Hageman, and Radtke (2010) while
studying CPA firms’ ethical climates, found an undesirable
disconnect between the perceptions about the ethical workplace
climate by partners from non-partners. This disconnect phenomenon
may reinforce the notion that separate ethical workplace climates exist
within certain hierarchal organizational structures. In a wider multi-
industry study, Trevino, Weaver, and Brown (2008) also found that
executives similarly had a “. . . significantly more positive perceptions
of organizational ethics when compared to rank and file employees”
(p. 243). Research is evidencing that ethical climate perceptions vary
Journal of Accounting, Ethics & Public Policy 103
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within firm structure and that leadership affects ethical climate
perceptions. Accounting firm subordinates make paramount ethical
decisions within their perceived workplace ethical climate that impact
and manifest professional integrity and concern for the public’s trust.
The preferred ethical climate types would be those that
persuade accounting subordinates to be concerned about their ethical
behavior in relation to the public’s trust, compliance with laws and
regulations, as well as compliance with accounting’s professional
standards. Thus, the preferred ethical climate types, as per Table 1,
for the accounting profession appear to be caring, rules, and lawcode.
An accounting firm’s leadership, knowing where its present perceived
ethical climate type is set, within in its firm’s culture, and knowing
also where the ideal ethical climate type should be, can make action
plans to close that ethical-climate-type perception gap. For lengthier
descriptions of the five empirically derived ethical climate
perceptions, see Appendix A, Table A1, Descriptions of the Five
Empirically Derived Ethical Climate Perceptions and the
Profession’s Ethical Climate Preference Arguments.
METHODOLOGY
Overview
The purpose of this study was to examine the degree to which
public accounting firm’s FRLT leadership styles are associated to
subordinates’ perception their workplace ethical climate type. Web-
based surveys were administered to accounting firm employees, of an
acceptable sample size for organizations classified as local, small-,
local, large-, and regionally-sized public accounting firms in the State
of Utah. The first survey was the Multifactor Leadership
Questionnaire (MLQ), or standard MLQ, or also known as the MLQ
5X short (MLQ, 1995). The MLQ was developed over time and has
gone through several refinements (Avolio, Bass, & Jung, 1999). The
validated MLQ is thought to be the best suited instrument for
measuring the full-range of leadership behavior styles typically
exhibited in the workplace (Avolio & Bass, 1999; Van Eeden, Cillers,
& Van Deventer, 2008). The second survey was the Ethical Climate
Questionnaire (ECQ). The validated ECQ was developed from the
104 Barnes, Christensen, & Stillman: Accounting Leadership and Ethical
Climate
ethical climate framework research promulgated by Victor and Cullen
(1987, 1988).
Research Questions
Professional accounting leaders and business leaders, in
general, seek to understand how best to improve the firm’s leadership
practices to effectively encourage within the accounting firm the
highest level of ethical intention and behavior among its members.
This study sought to explore answers to the following question: To
what degree do partners, managers, and supervisors’ various
leadership styles potentially influence the ethical climateas
measured by subordinates’ perceptions. A variety of hypotheses
naturally derive from these research questions.
Quantitative Hypotheses
H10: A leader’s transformational leadership style does not
significantly correlate to the subordinate’s perception of the firm’s
workplace ethical climate type.
H20: A leader’s transactional leadership style does not significantly
correlate to the subordinate’s perception of the firm’s workplace
ethical climate type.
H30: A leader’s passive-avoidant leadership style does not
significantly correlate to the subordinate’s perception of the firm’s
workplace ethical climate type.
The alternate hypothesis for each of the three null hypotheses
is that certain leadership styles do potentially influence employee
perceptions of workplace ethical climate type.
Population
The research was carried out in Utah. In late 2010,
approximately 1,175 certified public accountants (CPAs) were in the
practice of public accounting and members of their profession’s state
accounting association. These CPAs worked in a variety of different-
sized firms, ranging from sole proprietorships to large professional
international corporations. The number of CPAs per firm range from
one to scores of CPAs, within a single geographically located firm.
Journal of Accounting, Ethics & Public Policy 105
Volume 15, No. 1 (2014)
There were 469 separate physical CPA firm offices in Utah at the
time of the study, many with fewer than five CPAs. Of the 469 firms,
only 41 firms had more than five CPAs or professional staff tracked
to become CPAs.
Target Population
For this study, a relationship needed to exist between a
subordinate and supervisor because it is within those
leader/subordinate relationships that perceptions of firm’s ethical
climate type occur. Figure 1 shows the minimum practice structure
sought for by this study.
Administrative
Partner,
CPA
Tax
Services
Supervisor,
CPA
Assurance
Services
Supervisor,
CPA
Tax
Services
Subordinate,
CPA
Assurance
Services
Subordiante,
CPA
FIGURE 1, Minimum Practice Structure Sought form Population
Firms with five or more CPAs, or professional staff tracked to
become CPAs, were deemed an acceptable target population firm
from which to draw a sample. Firms with 5 or more CPAs were able
to identify in which service function they more often worked, such as,
tax, assurance services, or other engagements. Firms with such varied
practice specialized professionals had at least two immediate
supervisor levels for investigation. At the time of the study, 41 firms
with five or more CPAs were listed in a professional directory. These
106 Barnes, Christensen, & Stillman: Accounting Leadership and Ethical
Climate
41 firms had 635 CPAs and prospective CPAs. This target population
served as the source for the sample.
Sampling Frame
After initially telephoning and communicating with each of
the 41 identified CPA firms with five or more professional staff,
permission was received to contact organizational leadership for
permission to conduct the surveys. After sending a packet of
information and instructions about the proposed research, 11 CPA
firms provided written permission to contact organization personnel,
via email, for the administration of the electronic research survey.
After three email requests, these 11 CPA firms provided 103 usable
responses, garnering a 43.6% response rate.
Informed Consent and Confidentiality
After having received a signed authorization letter from each
participating CPA firm, each prospective participant was
electronically sent an introductory letter and an informed consent
form. The informed consent form communicated that participation
was voluntary, replies would be kept confidential, names of non-
participants would not be disclosed, and all data from the surveys
would be coded to eliminate the risk of identifying any single
participant or firm. All those who participated electronically signed
and returned the informed consent form.
Theoretical Model Design
This study used a published instrument for measuring the
independent variables of leadership style and the dependent variables
of subordinates’ perception of the workplace ethical climate type.
Figure 2, provides explanation of the proposed independent and
dependent variables found in the integrated leadership and
subordinate ethical climate type perception framework.
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FIGURE 2, Conceptual Leadership and Subordinate Ethical Climate
Type Perceptions
Overview of the Research Design Appropriateness
This quantitative research study, with a correlation design,
investigated the relationships between independent and dependent
variables (Creswell, 2005). To answer this study’s research question,
survey respondents selected discrete Likert-type scale choices, thus
providing quantifiable data to measure the degree of their perceptions
and correlative association among the variables. The public
accounting subordinates quantified his or her immediate focal leader’s
full-range leadership style, which could be transformational (IV),
transactional (IV), or passive-avoidant (IV). The public accounting
subordinates then quantified his or her own perceptions of the
accounting firm’s workplace ethical climate type (DV) (i.e., caring,
law code, rules, instrumental, or independence).
Subordinates'
Immediate Superiors'
Transformational
Leadership Style
(IV)
Subordinates'
Immediate Superiors'
Transactional
Leadership Style
(IV)
Subordinates'
Immediate Superiors'
Passive-avoidant
Leadership Style
(IV)
Subordinates' Ethical
Climate Type Perceptions
(DV)
(i.e., caring, lawcode, rules,
instrumental, independence)
H1
H2
H3
Legend:
DV--Dependent Variable
IV--Independent Variable
H--Hypothesis
108 Barnes, Christensen, & Stillman: Accounting Leadership and Ethical
Climate
Validity and Reliability of MLQ and ECQ
Mind Garden, Inc. stated that since the MLQ, Form 5X was
developed in 1995, “. . . it has been used in nearly 300 research
programs, dissertations and masters theses around the globe” (MLQ,
2004, p. 33). In assessing the MLQ’s operational validity, meta-
analysis reviews in the military and in the wider organizational
psychology literature have established that the transformational
leadership and the rated and objectively measured performance
factors were more positive and stronger than with the transactional
styles of leadership and the less active passive-avoidant leadership
style (Dum dum, Lowe, & Avolio, 2002; Lowe, Kroeck, &
Sivasubramaniam, 1996).
The MLQ has demonstrated stable factor structure using
confirmatory factor analysis in several previous studies (Antonakis,
Avolio, & Sivasubramaniam, 2003; Avolio, Bass, & Jung, 1999;
Avolio 2002; Dum dum, Lowe, & Lowe, Kroeck, &
Sivasubramaniam, 1996). The Cronbach’s alpha reliability
coefficient ranges from .60 to .92 (MLQ, 2004). Mind Garden, Inc.,
the legal entity that sells the use of the MLQ instrument, stated, “For
the last 25 years, the MLQ has been the principal means by which we
were able to reliably differentiate highly effective from ineffective
leaders in military, government, education, manufacturing, high
technology, church, correctional, hospital, and volunteer
organizations” (MLQ, 2004, p. 12). This study seeks partially to
provide additional evidence about the accounting profession.
The ECQ has been widely used. Martin and Cullen (2006), in
their meta-analytic review of the ethical climate theory (ECT)
framework, stated, “Ethical climate theory (ECT) . . . is arguably one
of the most influential conceptual foundations in the business ethics
domain” (p. 175). The ethical climate type framework has been
widely used in empirical research since its introduction, “. . .
particularly [reported] through the Journal of Business Ethics” (p.
176). The empirically derived ethical climate types have shown some
stability through many research projects, ranging from dissertations to
peer-reviewed ethics journal articles. Martin and Cullen (2006)
confirmed what Victor and Cullen (1987) had suggested that the
Journal of Accounting, Ethics & Public Policy 109
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Ethical Climate Questionnaire scales are “. . . adequate for subsequent
investigative research . . .” (as cited in Weber, 1995, p. 515).
RESULTS
Descriptive Statistics
Descriptive statistics show personalized information for each
survey respondent and his or her relationship with the CPA firm, in
Tables 2 and 3, respectively.
TABLE 2, Respondents’ Personal Information (N=103)
Age
Freq.
Gender
Freq.
Education
Freq.
CPA?
Freq.
26
6
Female
29
AS
3
Yes
79
26-40
74
Male
74
BS
17
No
24
41-55
19
MS
81
>55
4
JD, etc.
2
TABLE 3, Respondents’ Relationship to and CPA Firm
Information (N=103)
Years
with
Firm
Freq.
Work
Function
Freq.
Respons.
Level
Freq.
Firm
Size
Freq.
0-2
18
Assurance
61
Partner
11
Big 4
0
3-4
27
Tax
35
Manager
42
National
1
5-10
32
Consulting
2
Supervisor
31
Regional
32
> 10
26
Other
5
Staff
19
Loc-large
50
Loc-asmall
20
The results of the descriptive statistical analysis indicate the
socioeconomic parameters reflective of this state’s professional
accounting population characteristics. The state-wide professional
accounting socioeconomic parameters are not too dissimilar to the
U.S. national population’s socioeconomic parameters for the
accounting profession (Gold, 2007).
110 Barnes, Christensen, & Stillman: Accounting Leadership and Ethical
Climate
Cronbach’s Alpha
Cronbach’s alpha was conducted to assess reliability and
internal consistency for each of the surveys’ scales. For instance, in
Table 4, the transformational leadership construct or scale, under the
Multifactor leadership Questionnaire (MLQ) has a Cronbach’s alpha
of 92%. The 92% measurement is the percentage of variability of a
composite score explained by the relationship of the 20 questions
making up the transformational leadership scale. The higher the
Cronbach’s alpha calculation, the better the scale is at representing
what it purports to represent. The lower the Cronbach’s alpha
calculation, the less reliable it is to draw associations with the data.
For Cronbach’s alphas, George and Mallery (2003) suggested the
following: “= > .9 Excellent, = > .8 Good, = > .7 Acceptable, =
> .6 Questionable, = > .5 Poor, and = < .4 Unacceptable” (p.
231). Cronbach’s alpha for all scales used in this study are listed in
Table 4.
TABLE 4, Cronbach’s Alpha for Surveys’ Scales
Survey/Scale
Cronbach’s
alpha
n
MLQ
Transformational
.92
20
Transactional
.49
8
Passive-avoidant
.71
7
ECQ
Caring
.62
7
Lawcode
.67
4
Rules
.76
4
Instrumental
.83
7
Independence
.69
4
When assessing Cronbach’s alpha for deeper subscale
reliability and validity, for transactional leadership, the following
results, as presented in Table 5, were observed.
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TABLE 5, Cronbach’s Alpha for Transactional Leadership
Subscales
Leadership Style/Subscale
Cronbach’s
alpha
n
Transactional
Contingent Reward
.68
3
Managementby-Exception (Active)
.70
4
Correlation Analysis for Transformation Leadership to ECQ
Scales The Pearson Correlation (r), significance (p-value), and the
number of items in the sample (N), for transformational leadership,
are reported in Table 6.
TABLE 6, Bivariate Correlation Analysis,
Transformational Leadership to ECQ Scales
Transformational
(IV)
Caring
(DV)
Lawcode
(DV)
Rules
(DV)
Instrumental
(DV)
Independence
(DV)
Pearson Correlation (r)
.411
.282
.402
-.525
.093
Sig. (2-tailed), p value
.000**
.004**
.000**
.000**
.349
N
103
103
103
103
103
** p value, correlation is significant at the .01 level (2-tailed).
The bivariate correlation analysis, reported that the dependent
variables of caring, law code, and rules workplace ethical climate
variables are positively and statistically correlated with the
independent variable, transformational leadership at a high level of
significance. On the other hand, the bivariate correlation analysis
showed that the correlation between the dependent variable of
instrumental workplace ethical climate with the transformational
leadership style is negatively and statistically significant. The
dependent variable of independence is not significantly correlated to
the independent variable of transformational leadership.
The results of analysis of variance (ANOVA) between
Transformational Leadership and all five empirically-derived ethical
climate types are presented in Tables 7, 8, 9, 10, and 11, respectively.
112 Barnes, Christensen, & Stillman: Accounting Leadership and Ethical
Climate
The Fcrit statistic and r2 values are also presented for the ethical
climate types, and thus, explaining to what degree transformational
leadership influences the recognition of the various ethical climate
types.
TABLE 7, ANOVA for Transformational Leadership (MLQ)
to Caring (ECQ)
Model
Sum of
Squares
df
MS
Fcrit
R2
Sig.
Regression
187.525
1
187.525
20.550
.169
.000**
Residual
921.678
101
9.126
Total
1109.204
102
** p value, correlation is significant at the .01 level (2-tailed).
TABLE 8, ANOVA for Transformational Leadership (MLQ)
to Lawcode (ECQ)
Model
Sum of
Squares
df
MS
Fcrit
R2
Sig.
Regression
28.873
1
28.873
8.718
.079
.004**
Residual
334.486
101
3.312
Total
363.359
102
** p value, correlation is significant at the .01 level (2-tailed).
TABLE 9, ANOVA for Transformational Leadership (MLQ)
to Rules (ECQ)
Model
Sum of
Squares
df
MS
Fcrit
R2
Sig.
Regression
72.129
1
72.129
19.504
.162
.000**
Residual
373.521
101
3.698
Total
445.650
102
** p value, correlation is significant at the .01 level (2-tailed).
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TABLE 10, ANOVA for Transformational Leadership (MLQ)
to Instrumental (ECQ)
Model
Sum of
Squares
df
MS
Fcrit
R2
Sig.
Regression
648.221
1
648.221
38.361
.268
.000**
Residual
1706.692
101
16.898
Total
2354.913
102
** p value, correlation is significant at the .01 level (2-tailed).
Table 11, ANOVA for Transformational Leadership (MLQ)
to Independence (ECQ)
Model
Sum of
Squares
df
MS
Fcrit
R2
Sig.
Regression
5.514
1
5.514
0.884
.009
.349
Residual
629.942
101
6.237
Total
635.456
102
Analysis of Hypothesis 1
Transformational leadership was found to have a statistically
significant relationship with the four ethical climate type perceptions
(i.e., caring, law code, rules, and instrumental). Higher levels of
transformational leadership corresponded to increased caring ethical
climate type [Fcrit (1,101) = 20.550; r = .411]. This relationship was
statistically significant at 1% level of significance (p < .000).
Transformational leadership accounted for about 17% of the variance
in the caring ethical climate type perception.
The higher levels of transformational leadership likewise
corresponded to an increased perception of the lawcode ethical
climate type [Fcrit (1,101) = 8.718; r = .282]. This relationship was
statistically significant at 1% level of significance (p < .004).
Transformational leadership accounted for about 8% of the variance
in the law code ethical climate type perception.
The higher levels of transformational leadership was found to
correspond to an increased perception of the rules ethical climate type
[Fcrit (1,101) = 19.504; r = .402]. This relationship was statistically
significant at 1% level of significance (p < .000). Transformational
114 Barnes, Christensen, & Stillman: Accounting Leadership and Ethical
Climate
leadership accounted for about 16% of the variance in the rules ethical
climate type perception.
Again, the higher levels of transformational leadership
corresponded to a decreased perception of the instrumental ethical
climate type [Fcrit (1,101) = 38.361; r = -.525]. This relationship was
statistically significant at 1% level of significance (p < .000).
Transformational leadership accounted for about 27% of the variance
in the Instrumental ethical climate type perception.
As discussed above, transformational leadership shows a
statistically significant relationship with the four ethical climate type
relationships (i.e., caring, lawcode, rules, and instrumental) at 1%
level of significance. Therefore, the null hypotheses are rejected.
The alternate hypotheses are accepted, and thus, the accounting
leaders’ transformational leadership style exerts statistically
significant correlative relationship to the subordinate’s perception of
the firm’s ethical climate types of caring, lawcode, rule, and
instrumental. Preferentially, transformational leadership is positively
correlated to subordinates perception of the preferred ethical climates
types of caring, law code, and rules; while, preferentially, negatively
correlated to the less desirable instrumental ethical climate type.
One non-significant statistical relationship exists between
transformation leadership and the five empirically-derived ethical
climate types. Higher levels of transformational leadership did not
correspond to an increased perception of the independence ethical
climate type [Fcrit (1,101) = .884; r = .093]. This relationship was not
statistically significant at either 1% or 5% level of significance (p <
.349). Because a non-significant statistical relationship exists
between transformational leadership and the independence ethical
climate, the null hypothesis cannot be rejected. It means that the
accounting leaders’ transformational leadership style does not exert
statistically significant correlative relationship to the subordinate’s
perception of the firm’s ethical climate of independence.
Journal of Accounting, Ethics & Public Policy 115
Volume 15, No. 1 (2014)
Correlation Analysis for Transactional Leadership to ECQ Scales
The second null hypothesis states that a leaders’ transactional
leadership style does not significantly correlate to the subordinate’s
perception of the firm’s ethical climate in Utah. The Pearson
Correlation (r), significance (p-value), and the number of items in the
sample (N), for transactional leadership, are reported in Table 12.
The bivariate correlation analysis, run using SPSS, reported that the
independent variable, transactional leadership is not significantly
correlated, at the 1% or 5% level of significance with the ethical
climate types. All probabilities are greater than .072.
TABLE 12, Bivariate Correlation Analysis,
Transactional Leadership to ECQ Scales
Transactional
(IV)
Caring
(DV)
Lawcode
(DV)
Rules
(DV)
Instrumental
(DV)
Independence
(DV)
Pearson Correlation (r)
.054
.149
.152
.054
-.038
Sig. (2-tailed), p value
.591
.132
.125
.585
.072
N
103
103
103
103
103
Analysis of Hypothesis 2
The relationships between transactional leadership (IV) and
the five ethical climate types (i.e., caring, lawcode, rules,
instrumental, and independence) result in p values ranging from as
low as .072 to .591. This finding suggests that the null hypothesis
cannot be rejected. Null hypothesis stipulates that the leaders’
transactional leadership style does not have statistically significant
correlative relationship to the subordinate’s perception of the firm’s
ethical climate types.
Correlation Analysis for Passive-avoidant Leadership to ECQ
Scales The Pearson Correlation (r), significance (p-value), and the
number of items in the sample (N), for passive-avoidant leadership,
are reported in Table 13. The third null hypothesis states that a
leaders’ passive-avoidant leadership style does not significantly
correlate to the subordinate’s perception of the firm’s ethical climate.
116 Barnes, Christensen, & Stillman: Accounting Leadership and Ethical
Climate
Presented are the Pearson Correlation (r), significance (p value) and
the number of items in the sample (N). The bivariate correlation
analysis indicates that the independent variable, passive-avoidant
leadership, is negatively and significantly correlated, at the 5% level
with rules variable. Also, the bivariate correlation analysis reported
that passive-avoidant leadership is positively and significantly
correlated, at 5% level of significance, with instrumental variable.
None of the other ethical climate types was significantly correlated to
passive-avoidant leadership. The probability values for caring,
lawcode, and independence were greater than .151.
TABLE 13, Bivariate Correlation Analysis,
Passive-avoidant Leadership to ECQ Scales
Passive-avoidant
(IV)
Caring
(DV)
Lawcode
(DV)
Rules
(DV)
Instrumental
(DV)
Independence
(DV)
Pearson Correlation (r)
-.073
-.143
-.237
.247
.010
Sig. (2-tailed), p value
.462
.151
.016*
.012*
.919
N
103
103
103
103
103
* p value, correlation is significant at the .05 level (2-tailed).
Analysis of Hypothesis 3
The results of ANOVA analysis, using SPSS software,
between Passive-avoidant Leadership (MLQ) to Rules (ECQ) and
between Passive-avoidant Leadership (MLQ) to Instrumental (ECQ)
are presented in Tables 14 and 15, respectively. The Fcrit statistic and
r2 values are also presented for the ethical climate types possessing a
statistical relationship, and thus, explaining to what degree passive-
avoidant leadership influences the recognition of the various ethical
climate types.
Passive-avoidant leadership was found to have a statistically
significant relationship with two ethical climate type perceptions (i.e.,
rules, and instrumental). Higher levels of passive-avoidant leadership
correspond to a decreased perception of the rules ethical climate type
[Fcrit (1, 101) = 6.001; r = -.237]. This relationship was statistically
significant at 5% level of significance (p = .016). Passive-avoidant
Journal of Accounting, Ethics & Public Policy 117
Volume 15, No. 1 (2014)
leadership accounted for roughly 6% of the variance in the rules
ethical climate type perception.
TABLE 14, ANOVA for Passive-avoidant Leadership (MLQ)
to Rules (ECQ)
Model
Sum of
Squares
df
MS
Fcrit
R2
Sig.
Regression
24.995
1
24.995
6.001
.056
.016*
Residual
420.655
101
4.165
Total
445.650
102
* p value, correlation is significant at the .05 level (2-tailed).
TABLE 15, ANOVA for Passive-avoidant Leadership (MLQ)
to Instrumental (ECQ)
Model
Sum of
Squares
df
MS
Fcrit
R2
Sig.
Regression
143.840
1
143.840
6.570
.061
.012*
Residual
2211.073
101
21.892
Total
2354.913
102
* p value, correlation is significant at the .05 level (2-tailed).
Similarly, the higher levels of passive-avoidant leadership
corresponded to an increased perception of the instrumental ethical
climate type [Fcrit (1,101) = 6.570; r = .247]. This relationship was
statistically significant at 5% level of significance (p = .012).
Passive-avoidant leadership accounted for roughly 6% of the variance
in the instrumental ethical climate type perception.
The results from Tables 14 and 15 indicate that passive-
avoidant leadership shows a statistically significant association, at 5%
level of significance, with the two ethical climate type relationships,
of rules and instrumental. The presence of a statistically significant
relationship suggests that the null hypothesis is rejected and the
alternate hypothesis is accepted, and thus, the accounting leaders’
passive-avoidant leadership style does exert statistically significant
correlative relationship to the subordinate’s perception of the firm’s
rules and instrumental ethical climates.
118 Barnes, Christensen, & Stillman: Accounting Leadership and Ethical
Climate
Three non-significant statistical relationships exist between
passive-avoidant leadership and the five empirically-derived ethical
climate types. The higher levels of passive-avoidant leadership does
not show a statistically strong relationship with an increased
perception of the caring [Fcrit (1,101) = 0.545; r = -.073], with
lawcode [Fcrit (1,101) = 2.094; r = -.143], and with independence [Fcrit
(1,101) = 0.011; r = .010] ethical climate types. These relationships
were not significant at p < .462, p = .151, and p = .919, respectively.
Therefore, the null hypothesis cannot be rejected. The null hypothesis
stipulates that the leaders’ passive-avoidant leadership style does not
have correlative relationship to the subordinate’s perception of the
firm’s caring, lawcode, and independence ethical climate types.
Passive-avoidant leadership is potentially deleterious to the
accounting firm. Subordinates’ were less inclined to recognize the
preferred ethical climate type of Rules; also, passive-avoidant
leadership supported the subordinates’ perception of the egoistic-
oriented instrumental ethical climate type. Both of these ethical
climate types can potentially create cognition that following policies
and procedures is not critical and that self-interest considerations are
acceptable behavior, possibly transcending concern for the public
trust and acting with integrity.
LIMITATIONS
Size of Sample and Geographic Footprint
Although this research project is a very limited in scope, the
findings are encouraging in identifying a leadership style that appears
to have strong correlative associations with the preferred ethical
climate types (i.e., caring, lawcode, and rules) perceived by
professional accounting subordinates. In the accounting profession,
immediate focal leaders matter and their ethics-oriented leadership
style matters. This limitation can be eased by replicating this research
model in other geographic locations to provide additional
confirmatory or nonconfirmatory evidence about the public
accounting profession. We have found no theoretical basis for
predicting that other samples would produce substantially different
findings.
Journal of Accounting, Ethics & Public Policy 119
Volume 15, No. 1 (2014)
Unbalanced Scale
In the course of creating the measurement scales for the ECQ
instrument, we must acknowledge an unfortunate typographical error.
The ECQ scale is negatively balanced with three “false” Likert
measure items and two “true” Likert measure items. The term for this
error is known as using an unbalanced scale for research
measurement. The published Ethical Climate Questionnaire scale
(Victor and Cullen, 1988) and the unbalanced version of the scale
used in this study are compared in Table 16.
TABLE 16, Proper Ethical Climate Questionnaire Scale and Scale
Used in This Study
Proper ECQ Measurement Scale
Measurement Scale of this Study
0Completely false
1Completely false
1Mostly false
2Mostly false
2Somewhat false
3Somewhat false
3Somewhat true
4Mostly true
4Mostly true
5Completely true
5Completely true
Using an unbalanced scale is not justified, unless it is “. . .
known a priori that virtually all respondents are leaning in one
direction” (Friedman and Amoo, 1999, p. 117). There was not an a
priori expectation or evidence of biased responses expected from
Utah’s public accounting professionals. This was simply a mistake of
our doing.
There is not much literature guidance about how to correct
existing data when the measuring scale is missing a Likert
measurement item, in this case the “somewhat true” scale item. The
fear was that the data may have become invalid and unreliable.
However, according to Bart Victor, who is one the originators of the
Ethical Climate Questionnaire (Victor and Cullen, 1988), this error
would in no way limit the interpretation of the relationships amongst
the constructs (personal communication, August 2, 2012, See
Appendix B).
Data also supported this assertion, as we found that the
calculated reliabilities of our unbalanced scale did not differ
120 Barnes, Christensen, & Stillman: Accounting Leadership and Ethical
Climate
substantially from the balanced version in other published research
(Appendix C, Tables C1 and C2). Although we regret this error, we
observe that ultimately participants in our study reported varying
degrees of agreement and disagreement and that those differences
were consistent with our hypotheses. This observation is consistent
with recent research. This research supports the supposition that when
end points on a scale are reasonable, the intermediate measures are
not that critical in measuring perceptions of the true construct under
consideration. Because the researcher error, in developing this
study’s ECQ survey instrument, does not disqualify the data as wholly
invalid, recommendations and conclusions were developed for this
study. This limitation can be ameliorated by simply correcting the
scale in the next applications of this research.
Slight Heteroscedasticity
Also, because some relationship exhibited slight
heteroscedasticity, generalizations about the sample results could be
suspect. However, Schmidt, Le, and Oh (2013) provide guidance
about inferring from non-normally distributed data, caused by a
variety of circumstances, in human resource management and
organizational behavior and applied psychology research. Their
research suggests that valid inferences can be drawn from non-
normally distributed data. This study’s research results provide useful
inferences of association that can benefit the accounting profession.
This slight heteroscedasticity limitation can also be arrested by
increasing sample sizes of additional applications of this research.
CONCLUSIONS AND RECOMMENDATIONS
This research study successfully found confirmatory evidence
regarding the effects of leadership style’s correlations on
subordinates’ perceptions of the preferred organizational ethical
climate types (i.e., caring, law code, and rules). Accounting leaders,
which employ transformational leadership, exhibit leader idealized
attributes, idealized behaviors, inspirational motivation, intellectual
stimulation, and individualized consideration. A review of the
descriptive statistics indicates that the transformational leadership
Journal of Accounting, Ethics & Public Policy 121
Volume 15, No. 1 (2014)
style statistical mean exhibited by leaders was 2.53, as presented in
Table 17. The MLQ Key of Frequency interprets 2.53 to be between
“sometimes” (2.0) and “Fairly often” (3.0). Among the various
leadership styles exhibited by the accounting subordinates’ focal
leader, transformational leadership style was the most frequently
recognized.
MLQ Frequency Key: 0.0 = Not at all, 1.0 = Once in a while, 2.0 =
Sometimes, 3.0 = Fairly often, and 4.0 = Frequently, if not always
Transformational Leadership Practice Opportunities
Public accounting firm’s organization structure is a classic
hierarchical structure. Partners/directors lead managers, managers
lead supervisors, and supervisors lead staff. Throughout a given year,
accounting firm leaders typically perform numerous singular
engagements. Supervisors and staff are the personnel mix that more
frequently changes between the various assigned engagements. In
Viator’s (2001) study, transactional leadership is commonly exhibited
with the accounting profession’s more routinized service functions,
such as, audit and tax services. During these singular engagements,
supervisors or focal leaders can practice for themselves and train their
subordinates in transformational leadership attributes and behaviors.
To increase transformation leadership style’s practice and recognition,
even among routinized service functions, public accounting leaders
may consider incorporating many recommendations listed in Table
18. Turning accounting leader/subordinate professional service
engagements into worthwhile training opportunities was suggested by
the AICPA’s Private Companies Practice Section’s 2011 Top Talent
Study (El-Ramly, 2012).
TABLE 17, Frequency Means of Leadership Style Recognized
Leadership Style
M
SD
Transformational
2.53
1.01
Transactional
2.16
1.06
Passive-avoidant
1.32
1.21
122 Barnes, Christensen, & Stillman: Accounting Leadership and Ethical
Climate
FIGURE 3, Utah’s Public Accounting Profession’s Future
Leadership Objective
As shown in Figure 3, the objective is not to eradicate
transactional leadership style, but rather to lessen its recognition,
while enhancing the perception of transformational leadership style.
Lessening transactional leadership style behaviors, while enhancing
transformational leadership style behaviors can be accommodated by
following the recommendations presented in Table 18,
Transformation Leadership Building Actions or Behaviors. (Barnes,
Christensen, Stillman, 2013). Many of these transformational actions
and behaviors are easily integrated into the daily engagement
activities of the professional accounting profession.
Future Leaders hip Recognition Objective
4.0 Transformational
3.0 2.53*
MLQ
Leadership
Style 2.0 2.16*
1.32*
1.0 Transactional
0.0 Passive-avoidant
Time
MLQ Frequency Key: 0.0 = Not at all, 1.0 = Once in a while,
2.0 = Sometimes, 3.0 = Fairly often, and 4.0 = Frequently, if not always.
* Current frequency means of leadership style recognized
Journal of Accounting, Ethics & Public Policy 123
Volume 15, No. 1 (2014)
TABLE 18, Transformational Leadership Building
Actions or Behaviors
Transformational
Leadership Style Scale
Scale Definition
The leader . . .
An Example of How an Accounting Firm Leader
Could Employ Transformational Behavior
Idealized Attributes
Instills pride
At the onset, during, and the end of an
engagement activity, let your subordinate know
how appreciative you are in leading an
engagement activity with the subordinate and that
both should grow from the experience
Goes beyond self-
interest
Always show personal interest in the
subordinate’s success by selflessly helping and
advising work efficiencies in a timely manner
Acts
respectfully
Always act respectfully to others, at all times, and
always show respect for the subordinate when
interacting with clients or colleagues
Displays confidence
At an appropriate time, discuss a sense of
responsibility and loyalty to the accounting firm
and confidence about the engagement’s
successful completion and purpose
Idealized Behaviors
Talks about values and
beliefs
During engagement activities’ reflective
opportunities (i.e., during meals, reviewing
subordinates’ work, discussing client difficulties)
share personal company-related, professional-
related, or personal-related values and beliefs
Specifies the importance
of purpose
At appropriate times, express the importance of
the professional accounting profession’s
responsibility to the public’s interest and how the
firm’s services add to client efficiencies,
compliance, and sustainability
Considers the moral
and ethical issues
At appropriate times, share your
moral/ethical/legal decision-making processes,
compliant with the accounting firm and or
profession’s recommended decision-making
practices
Emphasizes collective
sense of mission
At the onset of an engagement activity, speak of
the importance of team cohesion, problem-
solving agreement, and efficient and effective
completion of the engagement activity
124 Barnes, Christensen, & Stillman: Accounting Leadership and Ethical
Climate
TABLE 18 (cont.)
Transformational
Leadership Style Scale
Scale Definition
The leader . . .
An Example of How an Accounting Firm Leader
Could Employ Transformational Behavior
Inspirational Motivation
Talks optimistically
When discussion allows, speak positively about
the accounting firm’s future growth opportunities
and leadership opportunities for the subordinate
Talks enthusiastically
about work
objectives
During each engagement, be enthusiastic about
the engagement’s objectives and work tasks to be
completed by all involved
Articulates a
compelling vision
When occasion arises, communicate the strategic
goals and objectives of the accounting firm and
how the subordinate fits into the future success of
the accounting firm
Expresses confidence
At the onset of the engagement, express the
potential work task difficulties and how the
leader and subordinate will work together to
complete the engagement successfully
Intellectual Stimulation
Re-examines critical
assumptions
With each engagement, coach the subordinate
about how the engagement procedures can be
more efficiently performed, how worksheets
should be organized and designed to evidence
procedures have been properly performed, and
how improvements from the prior engagement
can be employed
Seeks input
Always seek subordinate input for solving client
engagement problems that arise
Gets others to innovate
Coach the subordinate about how to solve client
dilemmas, resolve accounting or tax measurement
problems, or use current professional literature to
bring another perspective to solving engagement
difficulties
Suggests new
approaches
At the onset of the engagement, coach the
subordinate about how up-line leaders might have
changed or reasons for not changing the
engagement approach
Journal of Accounting, Ethics & Public Policy 125
Volume 15, No. 1 (2014)
TABLE 18 (cont.)
Transformational
Leadership Style Scale
Scale Definition
The leader . . .
An Example of How an Accounting Firm Leader
Could Employ Transformational Behavior
Idealized
Consideration
Coaches
During the whole engagement, the leader should
selflessly coach the subordinate how to improve
the craft of performing the required engagement
procedures
Treats others as
contributing
individuals
Learn about your subordinate before commencing
the engagement. Learn his/her name, family
circumstances or status, interests, and past
performance with an objective of helping the
subordinate to improve KSAs (i.e., knowledge,
skills, and abilities)
Considers individual
needs
Learn about the subordinate’s needs, abilities, and
aspirations to better coach his/her “career equity,”
so as to assist the subordinate in their desired
career path
Develops
others
During the engagement and at the end, assist the
subordinate in developing his or her strengths with
during-the-engagement work practice
recommendations and a meaningful performance
evaluation
Adapted: Scale definitions as adapted from Avolio and Bass, 1999.
Transformational leadership style, concerning respectful,
loyalty-building and attentive behavior, does not require additional
leadership time; it takes a change in leadership interpersonal behavior
approaches. For instance, transformational story-telling about values,
beliefs, ethical successes, easily replaces talking about trivial issues;
also, opportunities to express enthusiasm for the future or the
successful completion of a task, or expressions of confidence are
always available for each engagement. Including subordinates in
important engagement decisions and kindly sharing how work
product working papers can be better designed and organized are
nearly always present with each engagement. Turning a transactional
action into a transformational action is often in how the task
requirement is communicated and collaboratively completed. The
newer professional subordinate, at every level of the organization,
always appreciates selfless coaching by his or her leader. Changing
126 Barnes, Christensen, & Stillman: Accounting Leadership and Ethical
Climate
transactional leadership style tendencies to the transformational
leadership style is accomplished by changing one’s mindset.
Changing the Leadership Mindset
A change in leadership mindset can be accomplished through
training and improved procedures emphasizing transformational
leadership (Scaletta, 2006). By becoming a process-based
management entity, accounting firms must first (a) become aware that
leadership changes are necessary, (b) commit to make leadership
changes through approved leadership initiatives, (c) engage the whole
accounting firm with structural support for the time-requiring
transformational activities, as presented in Table 18, (d) ensure that
management processes are operational and effective, (e) integrate
transformational leadership into the strategy planning of the
accounting firm, and (f) embed transformational leadership in its
everyday language, presentations, newsletters, etc.
Additionally, each professional accounting firm leader is
required to earn sufficient number of continuing professional
education (CPE) hours to maintain CPA licensure. The State’s
accounting profession and firms should encourage taking CPE
courses instructing how transformational leadership opportunities
exist with the high-pressure and demanding public accounting
profession and how transformational leadership knowledge can
change into transformational leadership skills and abilities.
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of ethical work climates among public and private sector Asian
accountants. International Business & Economics Research
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Viator, R. E. (2001). The relevance of transformational leadership to
nontraditional accounting services: Information systems
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Victor, B., & Cullen, J. B. (1987). A theory and measure of ethical
climate in organizations. In W. C. Frederick (Eds.), Research in
Corporate Social Performance and Policy (JAI Press,
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Victor, B., & Cullen, J. B. (1988). The organizational bases of ethical
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Science, 6(5), 509-523.
Journal of Accounting, Ethics & Public Policy 131
Volume 15, No. 1 (2014)
APPENDIX A
TABLE A1, Descriptions of the Five Empirically Derived Ethical
Climate Perceptions and the Profession’s Ethical Climate Preference
Arguments
Ethical Climate
Perception
Factor Definitions in the Context of
Working at a Company
Beneficial Ethical Climate
Definitions for the Accounting
Profession
Caring
The caring ethical climate typifies persons
who think, of what is best for everyone is a
major consideration; the most important
concern is that of everyone; people look out
for each other’s good; you will do what is
right for the customers and public; and or,
working efficiently is important.
Preferred for the climate’s
potential for contributing to a
culture of concern for the
public’s trust.
Lawcode
The lawcode ethical climate typifies
persons who think, complying with the law
and professional standards over and above
other considerations is expected; the law
and ethical code of the profession is a major
consideration; following the legal or
professional standards is expected; and or,
the first consideration is whether a decision
violates the law.
Preferred for the climate’s
potential for contributing to a
culture of concern, seeing value
in, and complying with
professional ethical code and
standards.
Rule
The rules ethical climate typifies persons
who believe, following the company’s rules
and procedures is important; everyone is
expected to comply with rules and
procedures; being a successful is to “Go by
the book”; and or, people strictly obey the
company policies.
Preferred for the climate’s
potential for contributing to a
culture of following company
rules and procedures; so long
as such rules and procedures
are congruent with professional
Quality Control standards, the
Code of Ethical Conduct and
standards.
Instrumental
The instrumental climate typifies persons
who are, protecting their own interests
above all else; people out mostly for
themselves; people concerned with the
company’s interests—to the exclusion of all
else; believing work is considered
substandard only when it hurts the
company; and or, thinking the major
responsibility of people is to control costs.
Not preferred for its
deleterious contributions to the
ethical permissions,
prescriptions, and proscription
of an accounting firm’s culture.
132 Barnes, Christensen, & Stillman: Accounting Leadership and Ethical
Climate
TABLE A1, (cont.)
Ethical Climate
Perception
Factor Definitions in the Context of
Working at a Company
Beneficial Ethical Climate
Definitions for the Accounting
Profession
Independence
The independence climate typifies persons
who, follow their own personal and moral
beliefs; are persons deciding for themselves
what is right and wrong; believe the most
important concern is each person’s own
sense of right and wrong; and or, believe
people are guided by their own personal
ethics.
Neutrally preferred as a
concern can arise from
ignorance of the public’s trust
expectations; lack of
understanding the profession’s
or client’s industrial law,
regulation, and standards; or
lack of understanding the
company’s aligned rules and
procedure safeguarding the
company rom deviation from
professional standards.
Adapted: Victor and Cullen (1988).
Journal of Accounting, Ethics & Public Policy 133
Volume 15, No. 1 (2014)
APPENDIX B
Personal Guidance from Bart Victor, PhD
In a personal telephone conversation, on August 2, 2012, Bart
Victor, PhD, the Carl Turner Professor of Moral Leadership, was very
gracious and kind about how I should proceed, he stated,
. . . the data collection need not be reperformed; to address the
scale error in the ‘Methods’ section of the dissertation; to state
that the existing data means, variances, and correlations are
meaningful and reportable; to suggest that the scale errors do
not cause a systemic or universal disqualifying error, because
the recorded survey respondents’ impressions about the
perceived ethical climate types are still valid; to not transform
the data, thus, to use the existing data as is; and to check for
similar intercorrelations and reliability.
134 Barnes, Christensen, & Stillman: Accounting Leadership and Ethical
Climate
APPENDIX C
Intercorrelations and Reliability of Ethical Climate Scale Scores
The intercorrelations and reliability reported by Victor and
Cullen in their seminal ethical climate research study is presented in
Table C1. This study’s ECQ (modified) climate scales’
intercorrelations and Cronbach’s alpha coefficients for measuring
internal reliability are presented in Table C2.
TABLE C1, Intercorrelations and Reliability of Scale Scores
with Balanced Scale
Climate Scales
2
3
4
5
Cronbach’s
alpha
1. Caring
.45
.42
-.40
.19
.80
2. Law and code
.55
-.14
.07
.79
3. Rules
-.09
-.07
.79
4. Instrumental
.05
.71
5. Independence
.60
R > .06 (p < .05)
Source: Victor & Cullen, 1988, p. 113.
TABLE C2, Intercorrelations and Reliability of Scale Scores
with Unbalanced Scale
Climate Scales
2
3
4
5
Cronbach’s
alpha
1. Caring
.35
.49
-.16
.18
.62
2. Law and code
.68
-.38
.04
.68
3. Rules
-.39
.10
.76
4. Instrumental
.10
.83
5. Independence
.69
Source: This study’s intercorrelations and reliability, SPSS 19.
The intercorrelations and reliabilities appear reasonably close.
The researcher’s Table C2 scale results showed the similar pattern of
independence as the Victor and Cullen’s Table C1 scales and their
independence. The only exception is with rules intercorrelations with
independence. Victor and Cullen’s work showed slight and small
Journal of Accounting, Ethics & Public Policy 135
Volume 15, No. 1 (2014)
negative intercorrelations, while researcher’s information, presented
in Table C2, demonstrated slight and small positive intercorrelations.
Within the Utah professional accounting firms, as Victor and Cullen’s
work demonstrated, there are multiple recognized ethical climate
types. Additionally, the researcher’s Table C2 reported Cronbach’s
alphas, which measure the internal reliability of the items in the
ethical climate scales, are less but generally acceptable for reliance
(George & Mallery, 2003). For Cronbach’s alphas, George and
Mallery (2003) suggested the following: = > .9 Excellent, = > .8
Good, = > .7 Acceptable, = > .6 Questionable, = > .5 Poor, and
= < .5 Unacceptable” (p. 231).
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