The role of ethical climate types in professional accountants’ ethical decision-making: a necessary condition analysis ( NCA )

Ishwara P. and Naod Mekonnen

Accounting Research Journal, 2025, vol. 38, issue 5-6, 581-608

Abstract: PurposeThis study aims to examine the role of the ethical climate types of social responsibility and laws/professional codes in the ethical decision-making process of professional accountants using necessary condition analysis (NCA).Design/methodology/approachThe study applies NCA and partial least squares structural equation modeling (PLS-SEM) to analyze empirical data from 309 professional accountants and examines the necessity logic relationships between social responsibility and laws/professional codes with the components of ethical decision-making.FindingsThe NCA results revealed that social responsibility is a necessary condition for moral judgment and moral intent in the ethical decision-making process of professional accountants, whereas laws/professional codes is not. This indicates that higher levels of ethical behavior are unlikely without a minimum level of social responsibility. While the structural model analysis found that social responsibility and laws/professional codes are significant predictors of ethical decision-making, the findings highlight that in Ethiopia’s developing regulatory and institutional environment, social responsibility plays a more vital role than formal rules and standards in guiding the ethical conduct of professional accountants.Research limitations/implicationsThe study underscores the importance of incorporating social responsibility into frameworks designed to promote ethical behavior in the accounting profession. Future research should examine the effects of other factors of ethical decision-making based on NCA.Originality/valueThe study is among the earliest to use NCA alongside PLS-SEM to examine the relationship of social responsibility and laws/professional codes with ethical decision-making among professional accountants.

Keywords: Ethical climate types; Social responsibility; Law/professional codes; Ethical decision-making; Necessary condition analysis (NCA); Professional accountants (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:arjpps:arj-01-2025-0028

DOI: 10.1108/ARJ-01-2025-0028

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