Level Of Ethics Among Accounting Majors example essay topic

Due to innumerable instances of ethical lapses reported in the media recently, the accounting profession has come under close scrutiny. This study investigates if there are linkages between background characteristics and ethics among individuals who are on the verge of joining the accounting profession. An instrument is developed to measure ethical attitudes and administered to a sample population of college students majoring in accounting. Results show that i) ethics is inversely related to individual competitiveness, ii) personality types have no bearing on ethics, ) ethics diminishes with age, and iv) women have higher ethics. The study also compares the ethics level of accounting majors with those in other business and non-business majors.

INTRODUCTION Time has repeatedly proven that to err is human. Circumstances can sweep away even the best person's ethical principles. With the ever widening globalization and cut-throat competition, the pressure in the workplace is higher than ever before. With the desire to produce results, the modern worker can easily be tempted to compromise on ethical principles. Unfortunately, some fall victim to temptation more easily than others. It is ironic that most ethical violations are committed by the advantaged and successful professionals.

Among the business professionals, the accountants have come under greater scrutiny of their ethical values and practices due to recent disclosures in the media. In some instances, the ethical lapses on the part of even a handful of employees have brought their firms to extinction. This is why it has become important for companies to take a proactive stance in building an ethical corporate culture. This can be done only if the company has a team of employees committed to moral principles and the company provides an environment to nurture it. Often, companies place undue emphasis on employee / consultant skill sets and relegate other personal characteristics such as ethics to the background. Assuming a company truly wants to evaluate the ethical attitudes of a prospective or a current employee / consultant just as well as the skill set, what signals should they looking for?

What specific individual background and contextual factors are related to the ethical compass of a person? In what manner and to what degree these factors impact on the level of ethics? Which employees are most likely to commit ethical lapses? These are the questions this research aims to answer.

BACKGROUND Research in the field of ethics as related to business professions needs to be expanded especially in the face of the recent accounting scandals (Lindsay, 2002; Wood, 2002). Currently no unified model / framework exists capturing all possible factors influencing ethics in business environments. In our investigation, the factors that showed promise are: individual competitiveness, personality type, age, gender and nature of profession. Individual competitiveness is the personal desire to outperform a rival employee or company (M aramark and Marine, 1993). Modern work environment places considerable demands on the employees.

With the globalization of the marketplace and free flow of goods among the international communities, the competition among the corporations for market share has become fierce. While healthy competitiveness is an asset for an individual in the company, undue desire to outperform can lead to false claims or deliberate concealment of facts. This can result is ethical compromises. For instance, when making a sale an employee may extol the virtues of a product and intentionally hide its shortcomings.

It has become commonplace to advertise products and services offering attractive prices with restrictive clauses in fine print hoping the customers will not notice them. However, ethical lapses can cause large financial losses due to resulting lawsuits and bankruptcies. A real example is the tobacco industry which, in spite of evidence to the contrary, maintained that nicotine is not addictive. The recent case at Enron is another example.

In this case, losses were purposely hidden by high-level certified accountants and on revelation the documents were systematically shredded. It illustrates that in the conflict of interest between personal enrichment and duty to protect shareholders, greed wins handily. Ethical attributes in a person may be impacted by personality type (Barger, et al., 1998). There are several examples in various industries that support the possible linkage between personality types and ethical conduct (Tiger and Barron, 1993). Two types of personalities are discussed in literature: Type A and Type B (Rowe, 1992; van A ken et al., 1998).

Type A behavior consists of several characteristics: always being in a hurry, easily moved to hostility and anger, and high levels of ambition (Friedman and Rose man, 1974). They are aggressive, task oriented and time driven. On the other hand, Type B personalities are more low key, cooperative and patient. Because of their predisposition to win at any cost, we expect that Type A individuals will tend to compromise on ethics more readily. A study by Coombe and Newman (1997) reported that younger individuals tend to be less concerned with ethical considerations. In determining response to social interactions, they tend to have their own code of ethics and formulate own moral and ethical stances.

As individuals grow older, they become more philosophical and moralistic (Auerbach and Welsh, 1994; Barger et al., 1998). Thus, an older individual is more likely to have a higher level of ethics. Men appear to have lower ethics standards compared to women (Kelly, 1990). In a study conducted by Petty and Hill (1994), the researchers administered the Occupational Work Ethic Inventory to 2279 workers. Women scored significantly higher on ethics compared to men. Thus, past research seems to indicate that women will form a more ethical workforce.

There are good reasons to postulate that ethical values will differ across professions due to their intrinsic nature and the type of activities they entail. This is because individuals can be generally expected to match their values to the profession they aspire to work in. Someone who wishes to major in nursing or social work will likely have a high level of altruism. This is because of personal attributes and education which encourage high ethical conduct. On other hand, someone majoring in a business field is trained to make decisions based on optimizations of economic rewards.

Their emphasis is on the bottom line and they may be willing to manipulate the market for the sake of higher profits. Ethical considerations may take the back seat. The contribution of this research to existing literature is three-fold. First, while previous studies have examined ethics in the general workforce, we narrow the focus to business professionals, particularly Accounting. Second, the instrument developed in this study can have the practical benefit of providing a mechanism for self-monitoring one's own ethical status. Finally, it helps to pin down the areas that should be emphasized in designing a training curriculum in ethics for future accountants.

HYPOTHESES The following hypotheses were tested: H 1: There is no difference in the level of ethics among Accounting majors irrespective of their level of competitiveness. H 2: There is no difference in the level of ethics among Accounting majors irrespective of whether they are of personality Type A or Type B. H 3: The level of ethics among Accounting majors is independent of age. H 4: The level of ethics among Accounting majors is independent of gender. H 5: The level of ethics is independent of major. A survey instrument was developed to operation alize the ethics, competitiveness and personality type variables.

Data on the background variables such as age, gender, major, grade point average were also collected. The instrument was validated over three iterations each time retaining only items that met the content validity requirement. Each item was a cafeteria style statement that described a competitiveness level, ethics level or a personality type that the subject could identify him / herself in agreement or disagreement. An interval scale of 1 to 5 was used with 1 representing strong disagreement and 5 representing strong agreement with 3 being neutral. The ethics subscale measures contained 7 items describing possible belief / value systems that a subject could identify with as well as actions the subject would possibly take when faced with a dilemma. Some statements were: "Your loss is my gain", "I will do anything to win", and "You can cheat on an examination so long as you don't get caught".

To detect possible agreement bias, some statements were reverse scored. The internal consistency was tested by computing Cronbach's alpha coefficient which came out to be 0.81. According to Nun ally (1978), a value of over 0.5 is acceptable in sociological measurements. The mean score of all the items was computed for each subject and assigned as his / her Ethics Score (ES). The statements and the rating scale were designed in a manner that a higher ES represented one with a high ethical values and one who is least likely to compromise on principles even under a crisis. Competitiveness was measured using 7 items.

The Cronbach's alpha coefficient was 0.73. Some sample statements used for this subscale were: "I play harder than my teammates", "The more I win, the more powerful I feel", and "A group slows me down". As in the case of ES, the mean score of all the subscale items was computed for each subject and assigned a Competitiveness Score (CS). Personality type was also measured using 7 items. The Cronbach's alpha coefficient was 0.67.

Some sample statements used for this subscale were: "I function best under pressure", "If everybody did their job properly, my life would be much easier", "Keeping anger to oneself is a bad idea", and "I think that hobbies such as fishing and bowling are just a waste of time". The mean score of all the subscale items was computed for each subject and assigned a Personality Type Score (PTS). The scale was so designed that a high PTS signified a person of Type A and a low PTS signified a person of Type B. Demographic data on the subjects were also collected. These variables were age, gender, and major. The subjects for this study consisted of 50 students majoring in the field of Accounting in a four-year undergraduate curriculum at a large Southwestern state university in California. The mean age of the sample was 25.3 with a standard deviation of 6.7.

There were 32 women and 18 men. For the purposes of comparison, an additional sample of 284 students majoring in non-Accounting and non-business areas was also collected. All analysis was done using SPSS statistical software.