Date of Award
Master of Philosophy (MPHIL)
Dr. William SHAFER
The practice of earnings management not only adversely affects the long-term economic prospects of a particular business enterprise by eroding public confidence in the company, but also may severely undermine the reputation of Hong Kong as an international financial and trading centre. Given the devastating effects of such practices resulting from corporate scandals such as Enron and WorldCom, earnings management has received unprecedented attention in the past decade. The incommensurability between the far-reaching effects of ethical issues relating to earnings management and the paucity of prior research on the subject in Hong Kong triggers my interest to study this topic.
The study examines the influence of organizational ethical climate and the perceived importance of corporate ethics and social responsibility on practicing accountants’ ethical decisions regarding accounting and operating earnings management. Structural equation modeling (SEM) is used to test the hypotheses. Based on 206 survey responses from practicing accountants, the models for both accounting and operating earnings management provide general support for the hypotheses. The results indicate that participants’ perceptions of the ethical climate in their organization influence their attitudes toward the perceived importance of corporate ethics and social responsibility, which in turn influence ethical decisions (judgments and intentions) regarding earnings management.
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Lam, M. (2012). Ethical climate, the perceived importance of ethics and social responsibility, and earnings management (Master's thesis, Lingnan University, Hong Kong). Retrieved from http://dx.doi.org/10.14793/acct_etd.14