Document Type
Journal article
Source Publication
Managerial Auditing Journal
Publication Date
1-1-2011
Volume
26
Issue
5
First Page
372
Last Page
392
Publisher
Emerald Publishing Limited
Keywords
Earnings, Ethics, Accountants, China
Abstract
Purpose - The purpose of this study is to investigate the effects of Chinese industry accountants' perceptions of the ethical context in their organization and Machiavellianism on attitudes toward earnings management. Design/methodology/approach - The research is based on a survey of professional accountants employed by companies in Mainland China. Findings - The results indicate that perceptions of a strong organizational emphasis on serving the public interest (benevolent/cosmopolitan climate) significantly reduced professional accountants' willingness to condone accounting earnings management. Professionally certified accountants also judged accounting earnings management more harshly. Consistent with our expectations, high Machiavellians judged earnings management more leniently, although this effect was only marginally significant in the case of accounting earnings management. In contrast to prior studies of earnings management in the USA, the participants judged accounting earnings management more leniently, but judged operating earnings management more harshly. Originality/value - This is the first study to document that an organizational emphasis on serving the public interest can restrain aggressive behavior among industry accountants. Claims of serving the public interest in accounting have traditionally focused on the role of the independent auditor in protecting the public from misleading financial reporting. The results indicate that appeals to public interest obligations also have resonance for professional accountants in industry. The fact that certified accountants were less tolerant of accounting earnings management also has important implications, demonstrating the practical value of professional certification programs and their associated training and socialization processes. The contrast observed between the ethical judgments of our Chinese participants and US accountants surveyed in previous studies raises important questions for further research.
DOI
10.1108/02686901111129553
Print ISSN
02686902
E-ISSN
17587735
Publisher Statement
Copyright © Emerald Group Publishing Limited
Access to external full text or publisher's version may require subscription.
Full-text Version
Accepted Author Manuscript
Language
English
Recommended Citation
Shafer, W. E., & Wang, Z. (2011). Effects of ethical context and machiavellianism on attitudes toward earnings management in China. Managerial Auditing Journal, 26(5), 372-392. doi: 10.1108/02686901111129553