Effects of materiality, risk, and ethical perceptions on fraudulent reporting by financial executives
David Bourget (Western Ontario)
David Chalmers (ANU, NYU)
Rafael De Clercq
Ezio Di Nucci
Jack Alan Reynolds
Learn more about PhilPapers
Journal of Business Ethics 38 (3):243 - 262 (2002)
This paper examines fraudulent financial reporting within the context of Jones' (1991) ethical decision making model. It was hypothesized that quantitative materiality would influence judgments of the ethical acceptability of fraud, and that both materiality and financial risk would affect the likelihood of committing fraud. The results, based on a study of CPAs employed as senior executives, provide partial support for the hypotheses. Contrary to expectations, quantitative materiality did not influence ethical judgments. ANCOVA results based on participants' estimates of the likelihood that a "typical CPA" would manipulate reported results indicated that both materiality and risk significantly influenced the likelihood of fraud, but that the perceived morality of the action did not. In contrast, results based on participants' self-reported behavior indicated that materiality and the perceived morality of the action would influence the likelihood of fraud, but that financial risk would not. Regardless of the measure used for the likelihood of fraud, the results indicate that financial executives continue to be influenced by quantitative materiality when misstatements are clearly material on qualitative grounds.
|Keywords||Philosophy Ethics Business Education Economic Growth Management|
|Categories||categorize this paper)|
Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
|Through your library|
References found in this work BETA
No references found.
Citations of this work BETA
Michael J. O'Fallon & Kenneth D. Butterfield (2005). A Review of the Empirical Ethical Decision-Making Literature: 1996-2003. [REVIEW] Journal of Business Ethics 59 (4):375 - 413.
Michael J. O’Fallon & Kenneth D. Butterfield (2005). A Review of The Empirical Ethical Decision-Making Literature: 1996–2003. [REVIEW] Journal of Business Ethics 59 (4):375-413.
Peter E. Mudrack & E. Sharon Mason (2013). Ethical Judgments: What Do We Know, Where Do We Go? [REVIEW] Journal of Business Ethics 115 (3):575-597.
Jeffrey Cohen, Yuan Ding, Cédric Lesage & Hervé Stolowy (2010). Corporate Fraud and Managers' Behavior: Evidence From the Press. [REVIEW] Journal of Business Ethics 95 (2):271 - 315.
Subrata Chakrabarty (2014). The Influence of Unrelated and Related Diversification on Fraudulent Reporting. Journal of Business Ethics 131 (4):1-18.
Similar books and articles
John Kingston, Burkhard Schafer & Wim Vandenberghe (2004). Towards a Financial Fraud Ontology: A Legal Modelling Approach. [REVIEW] Artificial Intelligence and Law 12 (4):419-446.
Elizabeth Dreike Almer, Audrey A. Gramling & Steven E. Kaplan (2008). Impact of Post-Restatement Actions Taken by a Firm on Non-Professional Investors' Credibility Perceptions. Journal of Business Ethics 80 (1):61 - 76.
Tina D. Carpenter & Jane L. Reimers (2005). Unethical and Fraudulent Financial Reporting: Applying the Theory of Planned Behavior. [REVIEW] Journal of Business Ethics 60 (2):115 - 129.
Jill M. D'Aquila (2001). Financial Accountants' Perceptions of Management's Ethical Standards. Journal of Business Ethics 31 (3):233 - 244.
M. Van Dijk (2000). The Influence of Publication of Financial Statements, Risk of Takeover and Financial Position of the Auditee on Public Auditors' Unethical Behaviour. Journal of Business Ethics 28 (4):297 - 305.
M. van Dijk (2000). The Influence of Publication of Financial Statements, Risk of Takeover and Financial Position of the Auditee on Public Auditors' Unethical Behaviour. Journal of Business Ethics 28 (4):297-305.
William E. Shafer (2004). Qualitative Financial Statement Disclosures. Business Ethics Quarterly 14 (3):433-451.
Nancy Uddin & Peter R. Gillett (2002). The Effects of Moral Reasoning and Self-Monitoring on CFO Intentions to Report Fraudulently on Financial Statements. Journal of Business Ethics 40 (1):15 - 32.
Steven Kaplan, Kurt Pany, Janet Samuels & Jian Zhang (2009). An Examination of the Association Between Gender and Reporting Intentions for Fraudulent Financial Reporting. Journal of Business Ethics 87 (1):15 - 30.
Added to index2009-01-28
Total downloads11 ( #312,411 of 1,906,955 )
Recent downloads (6 months)1 ( #468,378 of 1,906,955 )
How can I increase my downloads?