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Ethical Awareness, Ethical Judgment and Whistleblowing: A Moderated Mediation Analysis

DOI:10.1007/s10551-017-3534-2
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Hengky Latan at FTD Institute
Hengky Latan
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Charbel Jose Chiappetta Jabbour
Charbel Jose Chiappetta Jabbour
Charbel Jose Chiappetta Jabbour
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Ana Beatriz Lopes de Sousa Jabbour
Ana Beatriz Lopes de Sousa Jabbour
Ana Beatriz Lopes de Sousa Jabbour
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Abstract and Figures

This study aims to examine the ethical decision-making (EDM) model proposed by Schwartz (J Bus Ethics, doi: 10.1007/s10551-015-2886-8, 2016 ), where we consider the factors of non-rationality and aspects that affect ethical judgments of auditors to make the decision to blow the whistle. In this paper, we argue that the intention of whistleblowing depends on ethical awareness (EAW) and ethical judgment (EJW) as well as there is a mediation–moderation due to emotion (EMT) and perceived moral intensity (PMI) of auditors. Data were collected using an online survey with with 162 external auditors who worked on audit firms in Indonesia as well as 173 internal auditors working in the manufacturing and financial services. The result of multigroup analysis shows that emotion (EMT) can mediate the relationship between EAW and EJW. The nature of this relationship is more complex and then tested by adding moderating variables using consistent partial least squares approach. We found that EMT and PMI can improve the relationship between ethical judgments and whistleblowing intentions. These findings indicate that internal auditors are more likely to blow the whistle than external auditors; and reporting wrongdoing internally and anonymously are the preferred way of professional accountants to blow the whistle in Indonesia.
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ORIGINAL PAPER
Ethical Awareness, Ethical Judgment and Whistleblowing:
A Moderated Mediation Analysis
Hengky Latan
1,2
•Charbel Jose Chiappetta Jabbour
3
•
Ana Beatriz Lopes de Sousa Jabbour
4
Received: 12 December 2016 / Accepted: 6 April 2017 / Published online: 18 April 2017
ÓSpringer Science+Business Media Dordrecht 2017
Abstract This study aims to examine the ethical decision-
making (EDM) model proposed by Schwartz (J Bus Ethics,
doi: 10.1007/s10551-015-2886-8,2016), where we con-
sider the factors of non-rationality and aspects that affect
ethical judgments of auditors to make the decision to blow
the whistle. In this paper, we argue that the intention of
whistleblowing depends on ethical awareness (EAW) and
ethical judgment (EJW) as well as there is a mediation–
moderation due to emotion (EMT) and perceived moral
intensity (PMI) of auditors. Data were collected using an
online survey with 162 external auditors who worked on
audit firms in Indonesia as well as 173 internal auditors
working in the manufacturing and financial services. The
result of multigroup analysis shows that emotion (EMT)
can mediate the relationship between EAW and EJW. The
nature of this relationship is more complex and then tested
by adding moderating variables using consistent partial
least squares approach. We found that EMT and PMI can
improve the relationship between ethical judgments and
whistleblowing intentions. These findings indicate that
internal auditors are more likely to blow the whistle than
external auditors; and reporting wrongdoing internally and
anonymously are the preferred way of professional
accountants to blow the whistle in Indonesia.
Keywords Whistleblowing Ethical decision making
Emotion Perceived moral intensity Professional
accountants Corporate governance
Introduction
Whistleblowing has gained the attention of the global
community and the media in recent years, partly because of
large awards offered by the Dodd-Frank Act of 2010 and
partly due to a case of fraud involving Olympus corpora-
tion and Michael Woodford who was fired when he
revealed payment irregularities (Archambeault and Webber
2015; Rao et al. 2011; MacGregor and Stuebs 2014). This
indicates that a whistleblower does not only arise from
inside the organization, but it can also come from outside,
and referred to as an external whistleblower (Maroun and
Atkins 2014b; Maroun and Gowar 2013).
An internal whistleblower can observe the various vio-
lations that occur within an organization such as discrim-
ination, corruption, cronyism or other unethical behavior.
Meanwhile, an external whistleblower can observe non-
compliance with the fulfillment of corporate social
responsibility and the environment (Culiberg and Mihelic
We thank two anonymous reviewers, Steven Dellaportas (editor) for
their valuable comments on prior versions of this paper.
&Hengky Latan
latanhengky@gmail.com; hlccorp776@gmail.com
Charbel Jose Chiappetta Jabbour
c.j.chiappettajabbour@stir.ac.uk
Ana Beatriz Lopes de Sousa Jabbour
ana.jabbour@strath.ac.uk
1
Department of Accounting, STIE Bank BPD Jateng, Jl.
Pemuda No 4 A, Semarang 50139, Indonesia
2
HLC Consulting, Jl. Kertanegara Selatan V No. 5B,
Semarang 50241, Indonesia
3
Stirling Management School, Centre for Advanced
Management Education (CAME), University of Stirling,
Stirling FK9 4LA, Scotland, UK
4
DMEM Department, University of Strathclyde, 75 Montrose
St, Glasgow G1 1XJ, UK
123
J Bus Ethics (2019) 155:289–304
DOI 10.1007/s10551-017-3534-2
Content courtesy of Springer Nature, terms of use apply. Rights reserved.
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