Brian M. Nagle is an Associate Professor of Accounting, Duquesne University, Pittsburgh, PA. E-mail: firstname.lastname@example.org.
The Impact of Ethical Tools on Aggressiveness in Financial Reporting
Article first published online: 7 DEC 2012
© 2012 Center for Business Ethics at Bentley University
Business and Society Review
Volume 117, Issue 4, pages 477–513, Winter 2012
How to Cite
Nagle, B. M., Wasieleski, D. M. and Rau, S. (2012), The Impact of Ethical Tools on Aggressiveness in Financial Reporting. Business and Society Review, 117: 477–513. doi: 10.1111/j.1467-8594.2012.00415.x
We would like to gratefully acknowledge research funding provided by the Duquesne University Wojeski Summer Research Grant Fund.
- Issue published online: 7 DEC 2012
- Article first published online: 7 DEC 2012
- Duquesne University Wojeski Summer Research Grant Fund
The proposed adoption of International Financial Reporting Standards (IFRS) in the United States has ignited a debate as to whether the principles-based nature of these standards better serves the interests of investors. While it is argued that these principled-based standards will encourage more transparent financial reporting than the current rules-based U.S. standards, critics argue that IFRS will invite more aggressive financial reporting through the liberal exercising of professional judgment. This empirical study aims to understand what individual and organizational factors may affect aggressiveness when making accounting judgments. In particular, we examine the influence that prior ethics training, codes of ethics and an individual's predominant moral reasoning schema have on adherence to company policy in an accounting-related (depreciation) judgment. Results of the study show that respondents with prior ethics training are more likely to adhere to company accounting policy than those who have not had formal ethics education. Respondents presented with a company ethics code also were less aggressive in their accounting judgments than those who were not presented with a code prior to reading the scenario. Finally, decision aggressiveness was moderated by individuals who used conventional moral reasoning schemas.