The role of managers' attitude in corporate fraud: Extending auditing standards

Hervé Stolowy (), Cédric Lesage (), Yuan Ding () and Jeffrey R. Cohen
Additional contact information
Cédric Lesage: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique
Yuan Ding: CEIBS - Europe International Business School

Working Papers from HAL

Abstract: During the wave of corporate frauds involving companies such as Enron, WorldCom, and Parmalat, auditors were under heavy criticism for failing to detect the frauds from the financial press as well as from regulatory bodies such as the Securities and Exchange Commission (SEC). Many argue (e.g., Benston and Hartgraves 2002) that these alleged audit failures are linked to the perceived lack of independence of auditors as a result of their offering both auditing and consulting services to their clients. However, a close analysis of professional auditing standards reveals that morals and ethics are perhaps not sufficiently emphasized as fraud risk factors. Based on anecdotal evidence from press articles related to 39 high profile alleged or acknowledged corporate frauds, this study uses the case analysis approach to apply the theory of planned behavior to document fraud cases. The results of the analysis suggest that morals, proxied by the concept of "attitudes", are a major fraud risk factor. Therefore, it is potentially important to strengthen the emphasis on morals and ethics in the auditing standards that are related to fraud detection.

Keywords: Attitudes; fraud auditing standards; fraud triangle; corporate fraud; theory of planned behavior (search for similar items in EconPapers)
Date: 2008-03-11
References: Add references at CitEc
Citations:

Published in 2008

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

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:hal:wpaper:hal-00580150

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().