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Abstract
While prior research has examined the impact of ethical leadership on subordinates' whistleblowing intentions, a leader's specific characteristics, such as emotional intelligence and group prototypicality, are underexplored. As with leadership style, they can play an important role in creating a control environment that facilitates fraud prevention, detection, and deterrence. This study examines the effects of perceived leader emotional intelligence and group prototypicality on the subordinate's intention to blow the whistle to the leader. Results indicate that a subordinate is more likely to blow the whistle when the leader is perceived as having high emotional intelligence or group prototypicality. Both relationships are mediated by the subordinate's trust in the leader. Moreover, the mediating effect of the subordinate's trust in the leader on the relationship between perceived leader emotional intelligence and subordinate whistleblowing intentions is stronger when the leader's group prototypicality is high. Academic and practical implications are discussed in the paper.
Data Availability: Data are available upon request.
... Apart from the argument framing and source credibility, emotional condition is also thought to influence the likelihood that someone is willing to report fraud. This assumption is based on research by Geng (2021), which states that mood and emotions play an essential role in the process of thinking and behavior. Geng (2021) explains the difference in understanding between feelings (mood) and emotions. ...
... More profoundly, this study can explain that when individuals are given a situation to work in a company that has a leader with good credibility, especially in combating corruption, employees will also be encouraged to report if fraud occurs in their work environment. In line with the results of Geng (2021), the characteristics of leaders who demonstrate ethical leadership in managing a company can influence employees' intentions to report fraud. Geng (2021) revealed that leadership style and characteristics play an essential role in creating a controlled environment that facilitates the prevention, detection, and prevention of fraud. ...
... In line with the results of Geng (2021), the characteristics of leaders who demonstrate ethical leadership in managing a company can influence employees' intentions to report fraud. Geng (2021) revealed that leadership style and characteristics play an essential role in creating a controlled environment that facilitates the prevention, detection, and prevention of fraud. Likewise, credibility can be assessed from the perspective of the system. ...
This research aims to test students' understanding of fraud cases using the persuasion elaboration model, namely the influence of argument framing, source credibility, and emotional condition on the decision to reveal fraud. This research method uses a 2x2x2 online laboratory experiment between subjects with 127 accounting students from Universitas Hayam Wuruk Perbanas. The results showed that the argument framing (positive vs. negative) did not make a significant difference. In contrast, source credibility (high vs. low) and emotional condition (good vs. bad) made a significant difference in accounting students' decisions to reveal fraud. This research contributes to behavioral accounting theory developed with communication science in predicting the behavior of prospective accountants. ABSTRAKPenelitian ini bertujuan untuk menguji pemahaman mahasiswa atas kasus kecurangan menggunakan model elaborasi persuasi, yaitu pengaruh pembingkaian argumen, kredibilitas sumber, dan kondisi emosi terhadap keputusan mengungkapkan kecurangan. Metode penelitian ini menggunakan eksperimen laboratorium online antar subjek 2x2x2 dengan partisipan sebanyak 127 mahasiswa akuntansi Universitas Hayam Wuruk Perbanas. Hasil penelitian menunjukkan bahwa pembingkaian argumen (positif vs negatif) tidak memberikan perbedaan yang signifikan, sedangkan kredibilitas sumber (tinggi vs. rendah), dan kondisi emosi (baik vs. buruk) memberikan perbedaan yang signifikan dalam keputusan mahasiswa akuntansi mengungkapkan kecurangan. Penelitian ini berkontribusi pada teori akuntansi keperilakuan yang dikembangkan dengan ilmu komunikasi dalam memprediksi perilaku calon akuntan.
... In turn, Hasford et al. (2022) found that high EI can increase fraudulent behavior. Geng (2021) revealed that leaders who have high emotional intelligence can increase FP. Noch et al. (2022) found that auditor competence has a negative effect on fraud detection if it is moderated by professional skepticism. ...
Fraud is bad behavior that can cause significant harm to the organization (Omar et al., 2016). Fraud must be prevented, but low emotional intelligence (EI) and professional commitment (PC) fueled by skepticism encourage actions that harm the organization to continue (Mohd-Sanusi et al., 2022). With skepticism as a moderating factor, this study aims to ascertain how emotional intelligence and professional commitment affect fraud prevention (FP). Forty-two respondents participated in this quantitative study of accounting department staff at the Regional Work Units (SKPD) Gowa Regency in South Sulawesi. SmartPLS 3.0 was used as this study’s analysis tool, and the questionnaires used to acquire the research data were from surveys. The moderation test results demonstrate two types of moderation: quasi-moderation and moderating predictors. Quasi-moderation demonstrates that the skepticism variable mediates the relationship between emotional intelligence and fraud prevention variables. The quasi-moderation variable interacts with the dynamic intelligence variable and is independent. Skepticism solely serves as an independent variable in the study model because it does not affect how the professional commitment and fraud prevention variables are related.
This study seeks to identify emotional intelligence (EI) as a key factor in dealing with emotions and pressures in an audit context. In this paper, we focus on how EI may influence the relation between job pressures (i.e., time budget pressure and client pressure) and auditors' judgment. Specifically, we investigate the moderating effect of EI on auditors' third-person assessments of an auditor's actions when subject to internal and external pressures. The results suggest that the moderating influence of EI can effectively reduce auditors' tendency to engage in dysfunctional behavior and improve audit quality. Further, moderation analysis suggests that EI is a significant mechanism that moderates the effects of different types of pressure on auditors' judgments.
Firms are under increasing pressure to implement effective internal whistleblowing systems. While firms can provide incentives to encourage internal whistleblowing, it remains controversial how such incentives should be structured. We examine whether the effectiveness of incentives encouraging internal whistleblowing is a joint function of the framing of such incentives (reward or penalty) and the strength of descriptive norms supporting internal whistleblowing. We predict and find in a lab experiment that penalties lead to a greater increase in internal whistleblowing (compared to rewards) when descriptive norms supporting whistleblowing are stronger. Our study contributes to the previous accounting literature on dishonesty and the role of management control systems design in promoting honesty and ethical norms in organizations. We also contribute to an emerging accounting literature on the links between controls, norms, and individual behavior by distinguishing between descriptive norms and injunctive norms and by highlighting the interplay between these two types of norms. Our results have important implications for organizations considering adopting incentives to encourage internal whistleblowing.
Only a fraction of employees who discover fraud report this information. Given the serious consequences of fraud, better understanding factors influencing individuals’ intentions to report fraud, particularly to a non-anonymous recipient such as a manager, is important. We predict that reporting intentions to a manager will be influenced by attributes of the firm (e.g., whether managerial procedural safeguards are strong or weak), the report recipient (e.g., whether the manager is likeable or unlikeable), and the type of fraud (e.g., misappropriation of assets or fraudulent financial reporting). Results from this experimental study indicate that managerial likeability and the type of fraud, but not managerial procedural safeguards or the interaction with managerial likeability, significantly influence reporting intentions to a manager. We contend that participants are influenced by managerial likeability because it provides specific information about the manager and acts as a signal about how the manager will likely handle a fraud report. These results, consistent with previous research (Robinson, Robertson, and Curtis 2012), suggest that participants make stronger attributions to a person engaging in misappropriation of assets compared to a person engaging in fraudulent financial reporting. Implications of this study to the practitioner and academic communities are discussed.
Socially desirable responding (SDR) refers to presenting oneself favorably regarding current social norms and standards. While SDR has concerned organizational researchers as a contaminant in self-assessment, it is argued here that such a presumption is inappropriate and that SDR may represent content variance in some settings. Further, a two-component model of SDR as self-deception and impression management is presented. One or both components of SDR may be related conceptually to the variable of interest such that indiscriminate control of SDR removes the predictive power of a measure. Implications of this reconception are considered for measuring and controlling SDR in organizational research. The distinction between self-deception and impression management is used to clarify a number of theoretical issues.
Why do some observers of organizational wrongdoing choose to report it? This question has received little research attention despite its prominence in the popular media. This paper attempts to show that whistle-blowing is a form of prosocial behavior. Empirical studies in the social-psychological literature of prosocial behavior provide clues about personality and situational variables predictive of whistle-blowing. Latané's and Darley's (1968, 1970) bystander intervention framework is modified for whistle-blowing decisions. Propositions for future research are offered.
This article presents a framework for emotional intelligence, a set of skills hypothesized to contribute to the accurate appraisal and expression of emotion in oneself and in others, the effective regulation of emotion in self and others, and the use of feelings to motivate, plan, and achieve in one's life. We start by reviewing the debate about the adaptive versus maladaptive qualities of emotion. We then explore the literature on intelligence, and especially social intelligence, to examine the place of emotion in traditional intelligence conceptions. A framework for integrating the research on emotion-related skills is then described. Next, we review the components of emotional intelligence. To conclude the review, the role of emotional intelligence in mental health is discussed and avenues for further investigation are suggested.
Whistle-blowing is often assumed to benefit society at large-whether from the view of 60 Minutes or from that of the members of the nearly 40 state legislatures that have passed statutes to protect whistle-blowers. Yet empirical research on conditions that lead whistle-blowers to be effective in getting organizational wrongdoing stopped is woefully absent. Encouraging whistle-blowing is inappropriate unless a person knows something about those variables that increase the likelihood that whistle-blowing will be effective. We present a model of effective whistle-blowing, from which we derive a set of propositions, based on theory and preliminary research in the area. It is hoped that this model will provide a research agenda for exploring a question of obvious importance practically as well as theoretically.
It is argued that emotions are lawful phenomena and thus can be described in terms of a set of laws of emotion. These laws result from the operation of emotion mechanisms that are accessible to intentional control to only a limited extent. The law of situational meaning, the law of concern, the law of reality, the laws of change, habituation and comparative feeling, and the law of hedonic asymmetry are proposed to describe emotion elicitation; the law of conservation of emotional momentum formulates emotion persistence; the law of closure expresses the modularity of emotion; and the laws of care for consequence, of lightest load, and of greatest gain pertain to emotion regulation. (PsycINFO Database Record (c) 2012 APA, all rights reserved)
Fraudulent activity is often first discovered by employees. Gaining an understanding of how meeting with the transgressor to discuss the apparent fraud (“social confrontation”) influences individuals’ likelihood of reporting fraud to internal recipients is particularly important for various stakeholders interested in the early reporting of fraud. Using an experimental approach, this study provides evidence on the extent to which unsuccessful social confrontation with one’s supervisor regarding apparent fraud influences reporting intentions to two different, but plausible, internal report recipients: the supervisor’s supervisor and an internal auditor. To broaden the generalizability of the findings, the study includes two different fraudulent acts. In the study, participants assume the role of an employee discovering a fraudulent act. The study manipulates two between-participants variables: (1) the presence or absence of unsuccessful social confrontation with the transgressor to discuss the apparent fraud and (2) the type of fraudulent act that apparently occurred (misappropriation of assets or fraudulent financial reporting). The results of the study were consistent with and extend power-related theories of whistleblowing. We find that under unsuccessful social confrontation, one’s reporting intentions to the supervisor’s supervisor are stronger than to an internal auditor. However, reporting intentions to the supervisor’s supervisor are not stronger than to an internal auditor when social confrontation did not occur. The type of fraudulent act did not influence the relation between social confrontation and reporting intentions. Our findings suggest that employees experiencing unsuccessful social confrontation may be more likely to seek out powerful internal report recipients. Thus, audit committees and others with an interest in fostering internal fraud reporting may find it helpful to include social confrontation strategies as part of a broader discussion with employees of responses to the discovery of fraud and make employees fully aware of how to report apparent fraud to senior internal report recipients
We present and explore a follower-centric model of how employees perceive the emotional intelligence (EI) of change leaders. Qualitative investigations of EI are rare and have not explored the field of organizational change leadership. Accordingly, we analyse qualitative data from a series of interviews set within the context of organizational change. We examine follower attributions about the abilities of their leaders to manage and express their own emotions and to respond appropriately to the followers’ emotions. The findings reveal that the ways in which leaders deal with emotion might be the key to followers sharing their own emotions with them. The impact of perceived leader EI on follower responses to change is also discussed. The complexity and ambivalence of our participants’ perceptions of the EI of their change leaders highlight the utility of a qualitative investigation.
Research on whistle-blowing has been hampered by a lack of a sound theoretical base. In this paper, we draw upon existing theories of motivation and power relationships to propose a model of the whistle-blowing process. This model focuses on decisions made by organization members who believe they have evidence of organizational wrongdoing, and the reactions of organization authorities. Based on a review of the sparse empirical literature, we suggest variables that may affect both the members' decisions and the organization's responses.
The purpose of this study is to evaluate claims that emotional intelligence is significantly related to transformational and other leadership behaviors. Results (based on 62 independent samples) indicated a validity estimate of .59 when ratings of both emotional intelligence and leadership behaviors were provided by the same source (self, subordinates, peers, or superiors). However, when ratings of the constructs were derived from different sources, the validity estimate was .12. Lower validity estimates were found for transactional and laissez-faire leadership behaviors. Separate analyses were performed for each measure of emotional intelligence. Trait measures of emotional intelligence tended to show higher validities than ability-based measures of emotional intelligence. Agreement across ratings sources for the same construct was low for both transformational leadership (.14) and emotional intelligence (.16).
This study (N = 216) measured the strength of endorsements for ingroup leaders who varied in both their relative ingroup prototypicality and distributive intergroup fairness. Leadership endorsement overall was positively related to group members’ levels of social identification and negatively related to their levels of reported self-interest. Among low identifiers, however, leaders’ distributive behavior reliably predicted endorsements, with stronger endorsements provided for distributively fair than unfair leaders. Among high identifiers, in contrast, both leaders’ distributive behavior and relative ingroup prototypicality were important. Leaders high in ingroup prototypicality received strong endorsements from high identifiers regardless of the leaders’ ingroup-favoring, outgroup-favoring, or fair intergroup behavior. Leaders low in ingroup prototypicality and who were relatively similar to the outgroup received strong endorsements from high identifiers only when the leaders made ingroup-favoring distributions. These data are interpreted within a social identity theory framework.
The social identity model of organizational leadership (SIMOL; Hogg and van Knippenberg, 2003 was extended analyzing the degree of employees’ effort as individual outcome of leadership effectiveness. Two studies were conducted with Italian participants. Study 1 was a survey conducted with 68 employees of a medium size company. Results showed the significant two-way interaction effect of team identification×leader group prototypicality in predicting employees’ work effort. Study 2, including 124 students, was a 2×2 within subject design (team identification high vs. low×leader group prototypicality high vs. low) using scenarios. Results confirmed experimentally the causal relationship between such variables: subjects in condition of high team identification and high leader group prototypicality perceive leaders as more effective than the subjects in the other three conditions.
While prior research focuses on the audit team made up of auditors, we focus on the collective audit team made up of auditors and specialists—in our context, information technology (IT) specialists. Complex systems in today's audits and researcher and regulator concerns regarding ineffective coordination and communication between the two specializations motivate better understanding of this collective audit team. We investigate how auditors and IT specialists perceive their relationship and how the audit process unfolds when these relationships are good and when they are difficult. Results of interviews conducted with Big 4 audit and IT practitioners provide evidence that they perceive their relationship quality to depend on the level of mutual value and respect. Auditors assert a one‐team view of the collective audit team that includes IT specialists, but IT specialists feel auditors see them as a separate team and a “necessary evil.” The audit process vastly differs between relationships perceived as difficult and good. In difficult relationships, the two specializations often struggle for status, with limited communication or effort to understand how their work fits together. Our findings imply difficult relationships are at risk for poor integration and unsupported reliance on IT functions, shedding light on recurring threats to audit quality identified by PCAOB inspections. In good relationships, auditors and IT specialists appear motivated to engage in frequent and open communication to help understand, coordinate, and complete the audit. Inferences gleaned from good relationships let us highlight prescriptions for audit firms to improve effectiveness of collective audit teams.
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Research on whistle-blowing has been hampered by a lack of a sound theoretical base. In this paper, we draw upon existing theories of motivation and power relationships to propose a model of the whistle-blowing process. This model focuses on decisions made by organization members who believe they have evidence of organizational wrongdoing, and the reactions of organization authorities. Based on a review of the sparse empirical literature, we suggest variables that may affect both the members’ decisions and the organization’s responses. The authors wish to thank H. Randolph Bobbitt and Jeffrey Ford for their comments on an earlier draft of this manuscript.
We review and summarize accounting literature that examines whistleblowing in the accounting context. We begin with a discussion of the whistleblowing model used in this study. Next, we conduct our review based on the following determinants of the whistleblowing intentions: characteristics of the whistleblower; characteristics of the report recipient, characteristics of the wrongdoer, characteristics of the wrongdoing, and characteristics of the organization. Under each determinant, we first summarize and analyze the findings of prior research, and then we present suggestions for future accounting research in whistleblowing.
Social identity theory is an interactionist social psychological theory of the role of self-conception and associated cognitive processes and social beliefs in group processes and intergroup relations. Originally introduced in the 1970s primarily as an account of intergroup relations, it was significantly developed at the start of the 1980s as a general account of group processes and the nature of the social group. Since then, social identity theory has been significantly extended through a range of sub-theories that focus on social influence and group norms, leadership within and between groups, self-enhancement and uncertainty reduction motivations, deindividuation and collective behavior, social mobilization and protest, and marginalization and deviance within groups. The theory has also been applied and developed to explain organizational phenomena and the dynamics of language and speech style as identity symbols. Chapter 1 provides a relatively comprehensive and accessible overview of social identity theory, with an emphasis on its analysis of intergroup conflict.
The purpose of this paper is to explore the importance of individual emotional intelligence (EI) traits for auditors in Big 4 and mid-sized public accounting firms. A total of 112 auditors were surveyed from all of the Big 4 and ten mid-sized firms, with respondents ranging from partner to first year staff accountants. Each participant rated and ranked the 15 EI traits identified in the TEIQue model for their importance to auditors. Stress management, adaptability, self-motivation, self-esteem and emotional regulation were rated as the most important traits. Trait happiness, impulsiveness, trait optimism, emotional expression and emotional perception were rated as less important, but still somewhat important. Assertiveness was considered to be more important to audit management as compared to supervisor/staff levels. Public accounting firms have already accepted the importance of EI in the audit process, yet prior accounting research has not explored which particular EI traits are most important. Understanding the relative importance of the various EI traits can lead to better screening of new hires and more focused EI training. This paper finds that all EI traits have some relevance for auditors across firm size and management/staff levels, however certain traits are considered much more important than others. This is an original finding.
Online labor markets allow rapid recruitment of large numbers of workers for very low pay. Although online workers are often used as research participants, there is little evidence that they are motivated to make costly choices to forgo wealth or leisure that are often central to addressing accounting research questions. Thus, we investigate the validity of using online workers as a proxy for non-experts when accounting research designs use more demanding tasks than these workers typically complete. Three experiments examine the costly choices of online workers relative to student research participants. We find that online workers are at least as willing as students to make costly choices, even at significantly lower wages. We also find that online workers are sensitive to performance-based wages, which are just as effective in inducing high effort as high fixed wages. We discuss implications of our results for conducting accounting research with online workers.
Data Availability: Contact the authors.
Examined the power–dependency relationships between "whistle blowers" and their employers through the regression analyses of survey data from 636 employees of federal agencies who had reported evidence of official wrongdoing. Ss reported that they were more likely to suffer retaliation if they lacked the support of their supervisors and managers. Retaliation was also more severe if the wrongdoing was serious and if the S used channels outside the organization to report the incident. Following severe retaliation, Ss were likely to file official complaints about the retaliation and to leave their jobs involuntarily. Other predictors of reactions to retaliatory action are discussed. (36 ref) (PsycINFO Database Record (c) 2012 APA, all rights reserved)
We report the results of four experiments investigating the relationship between (1) the quality of an audit, (2) jurors' assessments of the standard of prudent care (SOC) against which audit quality is compared, and (3) jurors' negligence verdicts. Experiment 1 operationalizes audit quality by varying the sample size used in audit testing, and provides evidence that jurors anchor their assessment of SOC on audit quality, producing a “competitive mediation” in which audit quality reduces the potential for a negligence verdict directly, but increases that potential indirectly by increasing SOC. Experiment 2 generalizes this finding to a setting that operationalizes audit quality by varying the size of adjustment the auditor required. Experiments 3 and 4 extend these results to a setting in which SOC is elicited after jurors make negligence verdicts. Overall, these experiments provide insight into the role of SOC in constraining and justifying negligence verdicts.
Data Availability: Contact the authors.
This study examines the impact of a social desirability response bias as a personality characteristic (self- deception and impression management) and as an item characteristic (perceived desirability of the behavior) on self-reported ethical conduct. Findings from a sample of college students revealed that self-reported ethical conduct is associated with both personality and item characteristics, with perceived desirability of behavior having the greatest influence on self-reported conduct. Implications for research in business ethics are drawn, and suggestions are offered for reducing the effects of a socially desirable response bias.
Prior academic and practitioner literature argues that the ethical tone at the top of an organization is a key factor in establishing an effective internal control environment. Drawing on self-concept maintenance theory and in-group bias theory, this study predicts that entry-level staff auditors will disregard a company’s ethical standards unless they observe a strong ethical tone from both their partner (tone at the top) and their supervising senior (tone at the bottom). Also, this study predicts that staff auditors will be more influenced by the tone of their supervising senior than the partner when these two individuals provide conflicting tones. In a 2 × 2 experiment that manipulates the tone set by a staff auditor’s supervising senior and engagement partner, this study provides evidence consistent with predictions. Further analyses suggest that participants make less ethical decisions because they are less likely to view the situation as an ethical dilemma when either the senior or partner exhibits low tone. The results of this study emphasize that tone at the top is not, by itself, sufficient to produce ethical decision making; organizations must strive to foster a strong ethical tone throughout the entire organization, especially at lower levels of the organization.
This chapter discusses the social psychologists study “top of the head” phenomena in their experimental investigations. Attention within the social environment is selective. It is drawn to particular features of the environment either as a function of qualities intrinsic to those features (such as light or movement) or as a function of the perceiver's own dispositions and temporary need states. These conditions are outlined in the chapter. As a result of differential attention to particular features, information about those features is more available to the perceiver. Relative to the quantity of information retained about other features, more is retained about the salient features. When the salient person is the self, the same effects occur, and the individual is also found to show more consistency in attitudes and behaviors. These processes may occur primarily in situations which are redundant, unsurprising, uninvolving, and unarousing. They seem to occur automatically and substantially without awareness, and as such, they differ qualitatively from the intentional, conscious, controlled kind of search which characterizes all the behavior.
We synthesize academic literature related to fraudulent financial reporting with dual purposes: (1) to better understand the nature and extent of the existing literature on financial reporting fraud, and (2) to highlight areas where there is need for future research. This project extends the work of Hogan et al. (2008), who completed a similar synthesis project, also sponsored by the Auditing Section of the American Accounting Association, in 2005. We synthesize the literature related to fraud by examining accounting and auditing literature post-Hogan et al. (2008) and by summarizing relevant fraud literature from outside of accounting. We review publications in accounting and related disciplines including criminology, ethics, finance, organizational behavior, psychology, and sociology. We synthesize the research around a model that illustrates the auditor's approach to fraud. The model incorporates auditors' use of the fraud triangle (i.e., management's incentive, attitude, and opportunity to commit fraud), their assessment of the existence and effectiveness of the client's anti-fraud measures (e.g., corporate governance mechanisms and internal controls), and their consideration of possible fraud schemes and concealment techniques when making an overall fraud risk assessment of the client. The model further illustrates how auditors can incorporate this assessment into an overall strategy to detect fraud by implementing appropriate fraud-detection procedures. We summarize the recent literature of each component of the model and suggest avenues for future research.
Although trust is an underdeveloped concept in sociology, promising theoretical formulations are available in the recent work
of Luhmann and Barber. This sociological version complements the psychological and attitudinal conceptualizations of experimental
and survey researchers. Trust is seen to include both emotional and cognitive dimensions and to function as a deep assumption
underwriting social order. Contemporary examples such as lying, family exchange, monetary attitudes, and litigation illustrate
the centrality of trust as a sociological reality.
Behavioral accounting researchers have historically been constrained in their ability to reach externally valid research participants. The purpose of this paper is to familiarize researchers with two relatively new and innovative ways to overcome this issue. First, this paper discusses two online instrument delivery services provided by SurveyMonkey and Qualtrics that can be used to distribute experimental materials to geographically distributed participants quickly and inexpensively. Second, it reviews a number of participant recruitment services that behavioral accounting researchers can use to identify and recruit externally valid research participants. Specifically, this paper discusses commercial participant recruitment services provided by SurveyMonkey Audience, Qualtrics, Amazon's Mechanical Turk, and other commercial firms, as well as several non-commercial participant recruitment services associated with industry and professional organizations. Each service is evaluated against three criteria that are important to behavioral accounting researchers: (1) cost, (2) flexibility, and (3) access to populations of interest.
Interest in the role of the reporting channel on whistleblowing has been fostered by the passage of the Sarbanes-Oxley Act of 2002, which requires that audit committees of public companies establish and oversee an anonymous reporting channel for questionable accounting or auditing matters. But only limited information exists as to the likely effectiveness of such a channel as compared to a non-anonymous channel. The purpose of our paper is to report the results of an experimental study examining participants' intentions to report fraud using anonymous and non-anonymous reporting channels given information about the outcomes from a previous non-anonymous whistleblowing incident. The experiment manipulates the outcomes to both the previous whistleblower and to the transgressor. We find that while negative outcomes from the perspective of a previous non-anonymous whistleblower (either the occurrence of retaliation against that person or no negative repercussions to the previous transgressor) lowered participants' non-anonymous reporting intentions, these negative outcomes did not decrease participants' anonymous reporting intentions. But when, no such negative outcomes from the previous whistleblower's perspective have occurred, our participants' reporting intentions did not differ between the anonymous and non-anonymous channels.
The process of public whistle-blowing and the organizational responses to it are explored, with particular emphasis on retaliation. Individuals who had filed complaints of unfair employment discrimination completed questionnaires about the organizational retaliation that followed their whistle-blowing. Correlation and regression analyses revealed that organizations were more likely to retaliate both against whistle-blowers who were valued by the organization because of their age, experience, or education, and against whistle-blowers whose cases lacked public support, than against other whistle-blowers.
Employee tips are the most common form of initial fraud detection, suggesting that employees frequently are aware of fraud before others professionally charged to detect fraud, such as internal and external auditors. Given the seriousness of fraud to a range of stakeholders, it is important to increase our understanding of the willingness of employees who learn about fraud to report this information to auditors. We conduct an experimental study describing a hypothetical situation involving an employee's discovery of a fraudulent act by his supervisor. Given the hypothetical situation, participants, assuming they were facing the situation, provide their intentions to report fraud to an auditor. The study examines several issues related to participants' intentions to report fraud to auditors. First, we predict and find that participants' reporting intentions to an inquiring auditor are stronger than their reporting intentions to a noninquiring auditor. Second, we predict and find that participants' reporting intentions to an internal auditor are stronger than their reporting intentions to an external auditor. Third, based on contrast coding results, we predict and find that inquiry and auditor type interact to influence reporting intentions. Fourth, we find that reporting intentions for two different types of fraudulent acts, misappropriation of assets and fraudulent financial reporting, do not significantly differ, nor does the type of fraudulent act interact with whether the auditor engages in inquiry or the report recipient (e. g., internal versus external auditor). Supplemental analysis provides additional information on the extent to which beliefs differ between the two types of fraudulent acts.
This paper investigates auditors' likelihood to report observations of colleagues' unethical behavior. We consider whether two characteristics that are particularly relevant to the audit environment, prior organizational response and power distance, affect willingness to report. Data collected from 106 senior-level auditors suggest auditors are more likely to report on their peers than on their superiors, but they are more likely to report superiors when prior organizational response is strong than when it is weak. Additionally, men appear to be relatively less sensitive to variations in power distance or prior organization response than women. Moral intensity of the case is significantly related to reporting likelihood, and power distance moderates this effect such that those who perceive this scenario to be of lower moral intensity are much more influenced by power distance than are those who perceive it to be of high moral intensity. These results contribute to the existing literature on accounting ethics, as well as inform public accounting governance policies.
We describe experimental vignette methodology (EVM) as a way to address the dilemma of conducting experimental research that results in high levels of confidence regarding internal validity but is challenged by threats to external validity versus conducting nonexperimental research that usually maximizes external validity but whose conclusions are ambiguous regarding causal rela-tionships. EVM studies consist of presenting participants with carefully constructed and realistic scenarios to assess dependent variables including intentions, attitudes, and behaviors, thereby enhancing experimental realism and also allowing researchers to manipulate and control indepen-dent variables. We describe two major types of EVM aimed at assessing explicit (i.e., paper people studies) and implicit (i.e., policy capturing and conjoint analysis) processes and outcomes. We offer best practice recommendations regarding the design and implementation of EVM studies based on a multidisciplinary literature review, discuss substantive domains and topics that can benefit from implementing EVM, address knowledge gaps regarding EVM such as the need to increase realism and the number and diversity of participants, and address ways to overcome some of the negative perceptions about EVM by pointing to exemplary articles that have used EVM successfully. Keywords research design, experimental design, quasi-experimental design Understanding the direction and nature of causal relationships is the cornerstone of science (Shadish, Cook, & Campbell, 2002). While the majority of management research provides evidence regarding covariation between antecedent and outcome variables, covariation alone does not answer two important questions crucial for establishing causality: (a) Did the antecedent occur temporally
This study examines the impact of various factors on ethical behavior of 507 employees working for three state-owned Chinese firms. Regulation of one’s emotions (a facet of emotional intelligence) had a significant positive impact on ethical behavior of respondents. Organizational commitment also had a significant positive impact on ethical behavior of the respondents. Among various facets of job satisfaction, satisfaction with promotion, coworker, and supervision had a significant positive impact on ethical behavior of respondents. Among control variables, age of the employee had a significant negative impact on ethical behavior, which indicated that the young employees showed a better ethical behavior than the old employees.
In spite of calls for deliberate differentiation between individual and team levels of analysis, leadership research based on well-grounded theory referring to multiple levels is scarce. We seek to fill this gap by analyzing the relations between transformational leadership, trust in supervisor and team, job satisfaction, and team performance via multilevel analysis. Results are based on a sample of 360 employees from 39 academic teams. Transformational leadership was positively related to followers' job satisfaction at individual as well as team levels of analysis and to objective team performance. The relation between individual perceptions of supervisors' transformational leadership and job satisfaction was mediated by trust in the supervisor as well as trust in the team. Yet, trust in the team did not mediate the relationship between team perceptions of supervisors' transformational leadership and team performance. Implications for theory and research of leadership at multiple levels as well as for practice are discussed.
This paper is divided into two parts. In the first, the rank order stability of individual differences in altruism across situations is examined and it is found that substantial consistency occurs when due regard is given to the principle of aggregation. In the second, a self-report altruism scale, on which respondents rate the frequency with which they have engaged in some 20 specific behaviors, is found to predict such criteria as peer-ratings of altruism, completing an organ-donor card, and paper-and-pencil measures of prosocial orientation. These data suggest there is a broad-based trait of altruism.
This study examines the decision to impose a control system and the resulting impact on the effort exerted by the controlled individual. I specifically consider subcertification, a system of certifications of financial data by the subordinate employees who provide that data. Despite the expected benefits of subcertification, it has not been universally adopted, largely due to concern about the impact on corporate culture and manager-subordinate relationships. To explore this concern, I examine the direct effects of relationship quality between a manager and subordinate on subordinate behavior when generating an accounting estimate. I provide evidence consistent with subordinates in high quality relationships exerting greater effort than those in low quality relationships. I next consider the effects of the decision to require subcertification on effort, finding that subordinate response to the control depends upon the existing relationship quality; high quality relationship subordinates decrease effort while low quality relationship subordinates increase effort. The findings I present are of particular importance to managerial accountants who are charged with control system design and implementation decisions. To the extent that greater effort yields higher quality estimates, this study has financial statement quality implications as well.
To align personal feelings with socially defined display rules, individuals often turn to one of two self-presentation strategies: surface or deep acting. Leaders could be expected to rely on these regulatory techniques, as their work roles demand an ability to convey meaning through emotions that may or may not be authentically felt. In this study, we examined how different forms of emotion regulation, as engaged in by those in leadership roles, influence follower job attitudes and behaviors. We predicted that follower perceptions of the leader–member exchange relationship would moderate main effect relationships. Survey results collected from 126 employed individuals indicated that LMX quality influenced follower reactions to the form of emotion regulation engaged in by supervisors. Specifically, deep acting was positively associated with job satisfaction for members in low-quality exchanges, while surface acting negatively affected participation in prosocial acts for individuals in high-quality exchanges. Implications and suggestions for future research are discussed.
This study provides both survey and experimental evidence to consider how social interactions between staff-level auditors and client management may affect staff auditors' perceptions and influence their decisions regarding the collection of audit evidence. During fieldwork, staff-level auditors have extensive interaction with client management. Survey evidence suggests that these staff-level auditors are often “mismatched” with client management, in terms of their experience, age, and accounting knowledge. Experimental results indicate that staff-level auditors may reduce the extent to which they collect evidence to avoid these interactions. Finally, the use of email communication with client management helped to mitigate the reduction in evidence collected caused by avoiding in-person interactions. Interestingly, when not collecting all the evidence, approximately half of the participants documented their findings in a vague or inappropriate manner, which would likely reduce the likelihood that reviewing auditors would identify a problem. Given the extent of audit evidence collected by young staff auditors, these findings have direct implications for workpaper and audit quality.
Data Availability: Data and materials used in this study are available upon request.
The Sarbanes-Oxley Act of 2002 (SOX, Sec. 301) requires audit committees of public companies to establish procedures for employee anonymous reporting of concerns regarding questionable accounting, internal control, or auditing matters. Audit committees have great flexibility in their implementation of this requirement. To address this issue, this paper reports the results of two experimental studies. Our first experimental study examines whether an anonymous hotline possessing stronger procedural safeguards, including external administration and related procedural safeguards, increases fraud-related reporting intentions in comparison with one possessing weaker procedural safeguards, including internal administration. Respondents' intentions to report a fraudulent act were greater under the weaker safeguards condition as compared with the stronger safeguards condition. These results were not anticipated, and an ancillary study was conducted examining internal versus external anonymous hotline administration, holding constant other procedural safeguards. The results show that respondents' intentions to report a fraudulent act were stronger under an internally administered hotline. Thus, our results suggest that an externally administered anonymous hotline may not increase fraud reporting. Our findings have implications for those who oversee and evaluate the operating effectiveness of controls.
This paper suggests that feelings (moods and emotions) play a central role in the leadership process. More specifically, it is proposed that emotional intelligence, the ability to understand and manage moods and emotions in the self and others, contributes to effective leadership in organizations. Four major aspects of emotional intelligence, the appraisal and expression of emotion, the use of emotion to enhance cognitive processes and decision making, knowledge about emotions, and management of emotions, are described. Then, I propose how emotional intelligence contributes to effective leadership by focusing on five essential elements of leader effectiveness: development of collective goals and objectives; instilling in others an appreciation of the importance of work activities; generating and maintaining enthusiasm, confidence, optimism, cooperation, and trust; encouraging flexibility in decision making and change; and establishing and maintaining a meaningful identity for an organization.
The importance of ethical behavior to an organization has never been more apparent, and in recent years researchers have generated a great deal of knowledge about the management of individual ethical behavior in organizations. We review this literature and attempt to provide a coherent portrait of the current state of the field. We discuss individual, group, and organizational influences and consider gaps in current knowledge and obstacles that limit our understanding. We conclude by offering directions for future research on behavioral ethics in organizations.
Prosocial motivation is egoistic when the ultimate goal is to increase one's own welfare; it is altruistic when the ultimate goal is to increase another's welfare. The view that all prosocial behavior, regardless how noble in appearance, is motivated by some form of self-benefits may seem cynical. But it is the dominant view in contemporary psychology. Most contemporary psychologists who use the term have no intention of challenging the dominant view that all human behavior, including all prosocial behavior, is motivated by self-serving, egoistic desires. Contemporary pseudoaltruistic views can be classified into three types: altruism as prosocial behavior, not motivation, altruism as prosocial behavior seeking internal rewards, and altruism as prosocial behavior to reduce aversive arousal. If altruistic motivation exists, then one has to make some fundamental changes in the conception of human motivation and indeed of human nature. As yet, the evidence is not sufficiently clear to justify such changes. If the conceptual analysis and research outlined in the chapter have merit, then the threshold of an empirical answer to the question why one care for other will be reached.