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The Moderating Role of Perceived Organisational Support in Breaking the Silence of Public Accountants

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Abstract

This paper reports the results of a survey with public accountants in Barbados on their intention to report a superior’s unethical behaviour. Specifically, it investigates to what extent perceived organisational support (POS) in audit organisations would moderate Barbadian public accountants’ intentions to blow the whistle internally and externally. Results indicate that internal whistle-blowing intentions are significantly influenced by all five individual antecedents (attitudes, perceived behavioural control, independence commitment, personal responsibility for reporting and personal cost of reporting), and the influence of the antecedents is intensified when the level of POS is high. However, further results indicate that external whistle-blowing intentions are significantly influenced by only three individual-level antecedents viz. attitudes, perceived behavioural control and personal cost of reporting, and their influence is intensified when the level of POS is low. The results suggest that POS is an important mechanism for controlling behaviour.

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Notes

  1. Although Bandura (1977) uses the term self-efficacy (SE), conceptually there is not much difference, as both refers to people's beliefs that they are capable of performing a given behaviour. However, operationally, they are assessed differently, as PBC is based on how much the behaviour is under the person's control, while SE is based on the likelihood that the person is able to overcome obstacles in order to perform the behaviour.

  2. There has been a stream of ethics literature which has also used organisational factors such as perceived ethical culture as antecedents to behavioural intention (e.g. Sweeney et al. 2010, 2013). We believe that POS as a potential moderator can serve to influence individual factors highlighted in the literature. There has been only one study using POS in ethics research (Adebayo 2005), and our study is the first to utilise POS in the whistle-blowing context and among external auditors.

  3. We focus more on reporting misconduct committed by individuals at higher levels in the organisational hierarchy (e.g. audit manager or partner), rather than lower level staff such as junior staff. Prior research has shown that it is more difficult to report on higher level staff than peers on one’s level, given the high perceived personal cost of reporting (Miceli et al. 2008).

  4. As of 31st March 2012, there were 194 out of ICAB’s total membership of 689 qualified accountants holding practicing certificates to audit.

  5. The minimum sample size requirements may be calculated by the formula 50 + 8 m, where m is the number of predictors (e.g. in this study, there are 10 predictors), thus yielding a sample size of 130. The formula 104 + m should be used to test individual predictors, where m is the number of predictors, resulting in a sample size of 114.

  6. Audit firms operating in Barbados include the major international accounting firms of Ernst and Young, KPMG, PriceWaterhouseCoopers, and Deloitte and Touche. In addition, there are several smaller firms of varying sizes (e.g. Pannell Kerr Forster and Porter Hetu International), as well as many sole practitioners.

  7. It is possible that the sheer size of the research instrument may have lowered the actual response rate in the end.

  8. A copy of the questionnaire is available from the authors.

  9. This study was part of a larger research project. The project included two other scenarios (adapted from prior studies) related to an external auditor’s tendency to report unethical behaviour involving several audit issues of varying intensity. Scenario 2 dealt with the staff’s discovery of the audit partner’s agreement to the client’s unacceptable allowance of doubtful accounts (Shafer et al. 1999). Scenario 3 involved the audit senior having knowledge that the audit manager was considering employment with the client (Kaplan and Whitecotton 2001; Curtis 2006). Preliminary testing showed that there was no significant variability in the responses to the three scenarios. Given that any scenario could have been chosen, it was felt that the facts in the scenario in this study closely mirrored the Enron case.

  10. Since the study had several single-item constructs (i.e. personal responsibility for reporting and personal costs of reporting), structural equation modelling (SEM) was not used. Hair et al. (2009) argued that “single-item measures can create identification problems in SEM; thus, we suggest their use be limited. Given the nature of SEM, latent constructs represented by multiple items are the preferred approach” (p. 717).

  11. Tabachnick and Fidell (2007) noted that statistical problems created by multicollinearity occur when correlations are ≥0.90. In addition, variance inflation factors (VIFs) in excess of 10 indicate potential multicollinearity.

  12. Each of the hypotheses for the main effects (H1 to H5) will be fully supported only if there is a significant relationship between the individual independent variable and both types of whistle-blowing.

  13. Table 7 shows the general results for the main effects and interactions from the moderated regression analyses. However, for significant interactions, simple slope analysis statistics are reported in this section.

  14. Beckford (2001) argued that “modern Caribbean society displays structural forms that are a direct legacy of the slave plantation system” (p.139). A plantation society is a political order, dominated by plantation owners. In other words, a plantation society is one in which the power is in the hands of the planter class (owners), who are directly responsible for making top down decisions.

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Authors and Affiliations

  1. Department of Management Studies, University of the West Indies, Cave Hill Campus, Bridgetown, Barbados

    Philmore Alleyne

  2. Adam Smith Business School, University of Glasgow, Glasgow, G12 8QQ, UK

    Mohammad Hudaib

  3. Department of Accounting, Economics and Finance, School of Management and Languages, Heriot-Watt University, Edinburgh, EH14 4AS, UK

    Roszaini Haniffa

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  1. Philmore Alleyne
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  2. Mohammad Hudaib
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  3. Roszaini Haniffa
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Correspondence to Philmore Alleyne.

Appendix

Appendix

Scenario Used in this Study

You are a junior auditor, working for an auditing firm and you are conducting an annual audit of a highly valued client, a machinery manufacturer that was about to go public. During the audit, you discovered that the manufacturing company had received a large loan from the local savings and loan association. It was illegal for a savings and loan association to make a loan to a manufacturing firm; they were restricted by law to mortgages based on residential real estate. You took the working papers and a copy of the ledger showing the loan to the engagement partner. The engagement partner, Tom Jones, listened to you, and then told you, “Leave the papers with me. I will take care of this privately”. You later learn that Tom has shredded the papers and has taken no further action. If one was to shred the papers, this would be in direct violation of the principle of “Integrity” of the IFAC’s Code of Ethics.

Adapted and modified from Rau and Weber (2004).

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Alleyne, P., Hudaib, M. & Haniffa, R. The Moderating Role of Perceived Organisational Support in Breaking the Silence of Public Accountants. J Bus Ethics 147, 509–527 (2018). https://doi.org/10.1007/s10551-015-2946-0

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