Management Accounting Frontiers
Special Issue – Unethical Behaviours and Management Controls: Issues and Challenges to Management Accounting
TABLE OF CONTENTS
Editorial: Unethical Behaviours and Management Controls: Issues and Challenges to Management Accounting
Vincent K. Chonga, Jan Alpenbergb, Zuraidah Mohd Sanusic
aThe University of Western Australia, Australia
bLinnaeus University, Sweden
cUniversiti Teknologi MARA, Malaysia
A Review of Organizations’ Cultural Controls on Corrupt Behavior
aThe University of Western Australia, Australia
bUniversitas Jenderal Soedirman, Indonesia
This paper critically reviews existing studies on culture controls, one of the elements of Malmi and Brown’s (2008) management control systems (MCS) package, and explore its effects on mitigating employees’ corrupt behavior. Cultural control is considered a means to shape shared norms, beliefs, values, attitudes, and ways of behaving in an organization. This paper is organized around three forms of cultural control, namely the code of conduct, the tone from the top, and peers’ behavior of Malmi and Brown’s (2008) MCS package. The overall picture that emerges from this review is that much more can be learned about the effects of cultural controls on corrupt behavior. While theories and empirical studies abound around the effects of cultural controls on unethical behavior, empirical evidence on its effects on corrupt behavior is still limited. A conceptual model of cultural controls on corrupt behavior is proposed, and potential avenues for future research are also discussed.
Keywords: Codes of Conduct; Cultural Controls; Peers’ Behavior; Tone from the Top
The Effect of Ethical Sensitivity and Accountability Pressures on the Ethical Decision-Making
Krisnhoe Rachmi Fitrijatia, Mahfud Sholihinb
aJenderal Soedirman University, Purwokerto, Indonesia
bGadjah Mada University, Yogyakarta, Indonesia
This study investigates the effect of ethical sensitivity on Ethical Decision Making (EDM) in an accounting context, with a laboratory experiment using a 2×2 between subjects involving 61 postgraduate students. It considers the person-situation interaction approach with rationalist-intuition as the basis of moral decisions. Our analysis reveals that ethical sensitivity affects EDM. Furthermore, accountability pressure interacts with ethical sensitivity to affect EDM. Our results are consistent with Rest (1986) model and Jones (1991) theory. EDM is affected by individual factors (ethical sensitivity) and organizational factors (anonymity and feedback accountability pressures). Our findings reveal that to improve EDM, organizations should increase the ethical sensitivity of their organizational members as well as set accountability pressures for them. Individu with high ethical sensitivity who are under the pressure of feedback accountability are more ethical in decision-making. This study employs students as subjects, the results should be interpreted cautiously. Future study should validate the findings using professional accountants as subjects or performing other research strategies, such as a qualitative approach, to answer why such phenomena exist.
Keywords: Accountability Pressure; Corporate Accountant; Decision-Making; Ethical Sensitivity
Delegation and Managerial Misreporting: The Role of Incentive Compensation Scheme and Trust in Superior
Muhammad Irdam Ferdiansaha
aUniversitas Hasanuddin, Indonesia
This study investigates determinants of managers’ misreporting behaviour. Misreporting in this study is defined as managers’ action of withholding or misrepresenting information to their superior for their own benefit. Specifically, this study examines the relationship between delegation of decision rights and incentive compensation scheme on manager’s misreporting behaviour. Furthermore, this study examines the mediating role of incentive compensation scheme on the relationship of delegation of decision rights on manager’s misreporting behaviour. In addition, this study explores the potential informal control of trust in superior in deterring delegated managers engaging in misreporting behaviour. The results from a survey of 145 managers who reside in U.S. show that delegation of decision rights affect manager’s misreporting behaviour directly and indirectly through incentive compensation scheme. Moreover, the results show that trust in superior negatively moderates the relationship between delegation of decision rights and manager’s misreporting behaviour, indicating that high trust in superior can be used as informal control to deter managerial misreporting behaviour.
Keywords: Delegation of Decision Rights; Incentive Compensation Scheme; Manager’s Misreporting Behaviour; Trust in Superior