The Impact of Psychological Traits on Judgments Related to Ethics

Sobhesh Kumar Agarwalla, Naman Desai and Arindam Tripathy

No WP2015-03-08, IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: This paper examines how two contradictory psychological traits, self-deception (SD) and professional skepticism (PS), affect managers and auditors assessments of the ethicality of various earnings management choices. Whereas, self-deception allows individuals to reduce cognitive dissonance (Festinger 1957) arising from their self-serving behavior which could be unethical (Audi 1988; Sanford 1988), professional skepticism or trait skepticism (Hurtt 2010) would force individuals to question such self-serving behavior and, as a result, could make them less likely to act unethically. The results indicate that SD, PS and participant type (Chartered Accountant (CA) versus Manager) had a significant effect on the ethicality ratings. Managers exhibiting high (low) SD and low (high) PS view the earnings management techniques that were generally considered to be unethical, as relatively more (less) ethical. For CAs, the SD and PS scores are not significantly related to their ethicality ratings. This result appears to be driven by the fact that CAs tend to have greater exposure information that emphasizes ethics such as their standards and education and hence psychological traits did not affect their ethicality ratings.

Date: 2015-03-21
New Economics Papers: this item is included in nep-acc and nep-neu
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.iima.ac.in/sites/default/files/rnpfiles/8684334682015-03-08.pdf English Version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iim:iimawp:13315

Access Statistics for this paper

More papers in IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department Contact information at EDIRC.
Bibliographic data for series maintained by ().