accounting ethics thesis

Advertisement

Ethics in Finance and Accounting: Editorial Introduction

• Published: 28 September 2016
• Volume 140 , pages 609–613, ( 2017 )

Cite this article

• Domènec Melé 1 ,
• Josep M. Rosanas 1 &
• Joan Fontrodona 1  

36k Accesses

30 Citations

Explore all metrics

In light of the recent crisis and its aftershocks, it becomes crucial to reflect on the relationship between finance and accounting and on how to integrate ethics and efficiency, as well as on how to motivate and empower practitioners in the world of finance to commit to justice, fairness and enhanced understanding, and to improving their personal integrity. This article, written as an editorial introduction to a special issue includes works related to control measurement and ethical behavior, misbehaviors in finances and accounting, professionalism in accounting, ethical investing and corporate reporting. We conclude by suggesting further research for a better integration of technical aspects of accounting and finances into business activity—human activity actually—and an for understanding of ethics not limited to rules, but as a mutual and interdependent system of values (human goods), virtues and principles.

Avoid common mistakes on your manuscript.

Today we must regain control of the future before it is too late—reverse the financialization process and ensure that finance once again operates in the interests of human dignity and progress.

Manifesto of Observatoire de la Finance ( 2008 ).

Finance and accounting are important functions for the management of any firm. Accounting systems are an essential tool for providing information for decision-making, as well as for the evaluation of decisions previously made, and the finance function must seek resources at a reasonable cost and use them efficiently.

Finances and accounting are not merely technical tools with no connection with ethics. They cannot work without trust and trust is not possible without ethics. Ethics includes action, foreseeable consequences and people, with their virtues or lack of virtues, involved in any human activity.

Let us briefly reflect on the causes of the financial crisis. At the end of May 2015, Mrs. Christine Lagarde, Managing Director of the International Monetary Fund, pointed out that “… recently (…) capitalism has been characterized by ‘excess’—in risk-taking, leverage, opacity, complexity, and compensation. It led to massive destruction of value. It has also been associated with high unemployment, rising social tensions, and growing political disillusion—all of this happening in the wake of the Great Recession.” (Lagarde 2014 ) This is contrary to what she calls “inclusive capitalism” the attributes of which are “trust, opportunity, rewards for all within a market economy—allowing everyone’s talents to flourish.” We could add that such “excess” (perhaps more accurately termed, “greed”) erodes both the common good and, connected with this, public trust. Again, it is Mrs. Largarde who recognizes such consequences: “In this age of diminished trust, it is the financial sector that takes last place in opinion surveys. This might not be surprising in light of some of the behavior that triggered the global financial crisis. But it is nevertheless disturbing. As many have pointed out, the very word  credit  derives from the Latin word for trust.” (Ibidem).

From a different perspective, Pope Francis, in quite severe terms, has warned us about the rejection of ethics and the necessity to recover it: “Ethics has come to be viewed with a certain scornful derision. It is seen as counterproductive, too human, because it makes money and power relative. It is felt to be a threat, since it condemns the manipulation and debasement of the person (…) Ethics—a non-ideological ethics—would make it possible to bring about balance and a more humane social order” (Pope Francis 2013 , #57). He advocated a financial reform in which ethics is central and proposed the motto: “Money must serve, not rule!” (Ibidem #58). We do not know if Mrs. Largarde read these comments, but in her above-mentioned speech, she affirms something similar: “Thankfully, the crisis has prompted a major course correction—with the understanding that the true role of the financial sector is to serve, not to rule, the economy. Its real job is to benefit people, especially by financing investment and thus helping with the creation of jobs and growth.” (Lagarde 2014 ).

Behind the previous statements are a great number of well-known scandals which, since the beginning of this century, have prompted the business and academic communities to reflect on the role of ethics in the business world. As the financial industry experiences major transformations, there is wide debate about the role of finance in society and how it can and should contribute to the common good. Similarly, certain auditing and reporting activities have been questioned in a number of notorious cases.

The debate has been particularly nourished by the global financial crisis and its aftermath. Voices from different arenas are questioning certain widespread practices of financial and non-financial companies and their management. Managers, businesspeople, politicians and, of course, academics and researchers should learn from the causes of this crisis and the scandals and deliberate on the proper role and ethical content of finance and accounting.

Aligned with this concern, there emerges the necessity to reflect on the analysis of the causes and consequences of ethical and unethical behavior in the financial sector and in accounting practices. Even more importantly, academics should seek and evaluate new proposals for a solid integration of ethics in finance and accounting. These problems were discussed in the 18th IESE Symposium on Ethics, Business and Society, held in Barcelona, Spain, on June 30–July 31, 2014. This special issue contains a selection of articles presented there. This editorial introduction gives an overview of these articles and proposes some short reflections on the integration of ethics in finance and accounting.

Control Measurement and Ethical Behavior

The theory of the firm based on the classical standard economic model proposes value maximization as an objective because, under some assumptions, this decision rule results in a socially efficient outcome. However, in practice, the basic assumptions often do not hold. Apart from other considerations, under the premise that “maximizing value goes first” one could manipulate accounting if necessary. This often leads to poor decisions and to unethical behavior. We suggest that to prevent this from happening, firms must have a strong sense of both internal and external mission, attempting to satisfy the respective real needs of employees and customers while not harming other stakeholders, making decisions in accordance with these two missions and integrating ethics into any management decision.

In the context of management control systems, and more specifically in performance evaluation the establishment of incentive systems typically ‘hangs’ from performance measures. The root of many misbehaviors is that organizational objectives cannot be entirely quantified; and while it is true that a ‘bad’ measure is better than nothing (if properly used), a bad measure poorly used may be much worse than nothing. If people are pushed only in the direction of quantifiable goals though ‘strong’ incentive systems that reward the quantitative results, it is very likely that they will not pursue the ‘real’ objectives of the firm, but seek to maximize the thing measured instead, which may well be, at the same time, both unprofessional and unethical.

The recent scandal Toshiba is illustrative. Toshiba is one of the ten biggest firms in Japan in terms of revenues, and one which is widely respected. In 2014 Toshiba overstated its profits by more than 1.2 billion dollars, or about one-third of the total figure reported, in order to meet the (otherwise unrealistic) targets that top management had established for the company and its subunits. According to the New York Times (Soble 2015 ), there were problems in “virtually all corners of its business, which encompasses products stretching from refrigerators to nuclear power plants.” Therefore, it is easy to conclude that the practice did not have to do with one manager occasionally misbehaving, but with the whole reporting and reward system. The same newspaper also reports that Hisao Tanaka, the serving chief executive, who has subsequently resigned, acknowledged that the company had engaged in “inappropriate accounting,” but said this had not been done intentionally, and denied that he had told subordinates to exaggerate the profitability of their divisions. How then, did it come to occur in “all corners of its business”? The answer is quite simple: it was through the pressure put on the executives by the measurement and reward system. Taking such measures triggered by the control system, they fostered unethical practices (lying to obtain an economic advantage) and damaged the whole company.

Related with control systems is the article co-authored by Cugueró-Escofet and Rosanas ( 2016 ), which focuses on the dysfunctional effects of certain current systems of measurement and incentives and the possible ways to overcome these effects and to achieve a stable state of congruence between corporate and individual goals. They develop a model of control systems based on justice.

Misbehaviors in Accounting and Finance

Causes of misbehaviors in finance and accounting can be diverse. The “fraud triangle” theory (Albrecht 1991 ) is often used to predict the likelihood of fraud within an organization by considering the presence of opportunity, incentive/pressure, and attitude/rationalization. The latter can include lack of awareness, intuition coupled with rationalization, and reasoning (Murphy and Dacin 2011 ). The model has been questioned, however, since fraud is a multifaceted phenomenon and its contextual factors may not fit into a particular framework (Lokanan 2015 ). Soltani ( 2014 ), by analyzing six well-known corporate frauds—three American (Enron, WorldCom and HealthSouth) and three European (Parmalat, Royal Ahold and Vivendi Universal)—identified possible causes as ineffective boards, inefficient corporate governance and control mechanisms, distorted incentive schemes, accounting irregularities, failure of auditors, dominant CEOs, dysfunctional management behavior and the lack of a sound ethical tone at the top.

Three papers refer to particular aspects of accounting and finance. Vladu et al. ( 2016 ) develop a model for detecting earnings manipulators using financial statement ratios from a sample of Spanish listed companies. They suggest that their proposal can be extremely useful in detecting manipulators and can be employed by a wide range of users of accounting information including stock exchange supervisors or investment professionals. Fassin and Drover ( 2015 ) highlights the moral dimension inherent in the entry and exit of venture partners and the importance of considering moral judgement, as well as intentions in decision-making. Using twelve vignettes, they look at the asymmetries between entrepreneurs and investors and discusses a set of ethical problems that arise among key actors concerning the dynamics of venture partner entry and exit, applying a multiple-lens ethical perspective to analyze these issues. On their part, Cowton and San-José ( 2016 ) identify and explore the ethics of trade credit. Making a distinction between “operating” trade credit and “financial” trade credit, they provide an account of the maximum period for which it is appropriate for one company to delay payment to another from which it has purchased goods or services.

Professionalism in Accounting and Finance

Many unethical decisions and finance scandals have occurred in a context of pressure to obtain short-run results. However, such decisions could have been avoided with good management—in the wide sense of being “good,” which involves professional competence, a strong sense of mission and behavior consistent with this by establishing the right priorities.

Accounting and finances need ethical rules, but are rules enough? Rules allow us to answer the question of whether or not a specific practice is acceptable in order to earn money. Rules will say that misrepresentation of the financial situation is not acceptable, nor is the taking of imprudent financial risk nor not acting in good faith in banking operations, to mention a few examples. There are excellent treatises in this line, which can be applauded, but some might question whether it is sufficient to adopt a set of rules added as constraints to economic activities.

Two papers deal with the importance of professionalism in accounting and finance. One of these, authored by Lail et al. ( 2015 ), reviews the causes of the recent accounting and financial reporting frauds and shows that regulatory reforms are insufficient. They argue that, although restoring financial reporting systems should begin with reforms, virtuous professionalism is necessary to restore the public-servant identity of the accounting professional. The second paper, by Alzola ( 2016 ), critically examines the normative foundations of gatekeeper liability. He posits that gatekeeper liability may be morally objectionable on grounds of both fairness and consequentialism. After systematizing the framing and the moral justification of gatekeeping duties, he questions the normative support for targeting intermediaries instead of primary wrongdoers. He concludes by anticipating some negative (and often overlooked) results of gatekeeping strategies in the accounting profession, specifically in the realm of clientele selection, the expectation gap, and auditor compensation.

Responsible Investment

Responsible investment has been encouraged by a great variety of institutions and voices, including the United Nations, which, since 2006, has backed principles for responsible investment (PRI). Two papers focus on responsible investment. Majoch et al. ( 2016 ), by using empirical research based on an annual survey of signatories carried out by the PRI in a 5-year period, found that pragmatic and organizational legitimacy, normative and utilitarian power, and management values are the attributes that contribute most to the salience of the PRI as a stakeholder. The next paper begins with a reminder that responsible investment provides an opportunity to express and promote ethical values via choice of financial instruments. In practice, however, the majority of retail investors retain a conventional approach to investment. Facing this situation, and based on behavioral economics and nudge theory, Pilaj ( 2015 ) develops a conceptual framework to improve the effectiveness of policy-making for sustainable and responsible investment.

Corporate Reporting

A specific field related to accounting, and of course, accountability is corporate reporting. The last two articles of this special issue focus on ethics in corporate reporting. S. Prakash Sethi et al. ( 2015 ) discuss the quality of Corporate Social Responsibility reports by some of the world’s largest financial institutions. Their evaluation using a novel instrument to measure the quality of reports shows, among other findings, that several factors have a positive influence on the quality of these reports. They find, for instance, more quality in countries based on common law and with higher CSR standards, policies and regulations in place. However firm size has no significant impact. Similarly, integrity quality is higher in countries with a common law regime. They conclude by offering guidelines for companies toward improving the quality of their reports, and several suggestions for further research.

Maniora ( 2015 ) focuses on integrated reporting, understood as “a process founded on integrated thinking that results in a periodic integrated report by an organization about value creation over time and related communications regarding aspects of value creation.” Through a wide empirical analysis, she examines the impact of such reporting on the integration of environmental, social and governance issues into the business model and the related economic and performance changes. Her results suggest that integrated reporting is a superior mechanism for the integration of environmental, social and governance issues only in some cases.

Conclusion and Future Research

Some papers presented in this special issue posit some current problem regarding the integration of ethics in finance and accounting and present some reflections, but much more research is still necessary; in all fields mentioned here, and others. However, in our opinion, future research should go to the very roots of the problem. In particular, two crucial issues deserve attention. The first is a deep understanding of the so-called “Separation Thesis” and the search for sound alternatives. In accordance with this thesis, “the discourse of business and the discourse of ethics can be separated so that sentences like ‘x is a business decision’ have no moral content, and ‘is a moral decision’ have no business content.” (Freeman 1994 , p. 412) A consequence of applying this thesis is seeing control systems as a business matter exclusively focused on measuring efficiency—remember Toshiba, mentioned above—and accounting and finance are a mere technique. The Separation Thesis, criticized by many, including the solid arguments of Putnam ( 2002 ), is contrary to the common sense of ordinary people. Who would say, for instance, that the mortgage securitization of Leman Brothers was a mere technique with no ethical content? Or that Bernard Madoff’s behavior was a simple Ponzi scheme? The Ponzi scheme is the technique used but Madoff’s behavior was not by any means a bare application of a technique.

The second issue is a broader view of ethics that comes from accepting that it entails not only rules, or vales or virtues, but rules, virtues and ethical values (human goods) which are mutually interdependent (Macintyre 1992 ; Melé 2005 , 2012 , pp. 32–3).

It is not our aim here to develop these two big issues, but we would like to suggest that a key for future research could be to go back to the simple idea that business activities are essentially human activities. And, if economic activities are essentially human, they belong to the field of philosophical anthropology and have an intrinsic ethical dimension (Melé and González Canton 2014 ). This is completely general for business, but in the context of this special issue, we can say that a full integration of ethics in finance and accounting requires seeing finance and accounting not simply as economic tools, or only as mere techniques, but as human activities and therefore intentional.

Being intentional activities, they can be applied to serve the cause of good or, on the contrary, for egoistic interests and to damage others, as happens in what is euphemistically termed “earnings management,” when actually there is accounting earnings manipulation or earnings fraud.

Albrecht, W. S. (1991). Fraud in government entities: The perpetrators and the types of fraud. Government Finance Review, 7 (6), 27–30.

Google Scholar  

Alzola, M. A. (2016). Beware of the watchdog: Rethinking the normative justification of gatekeeper liability. Journal of Business Ethics . doi: 10.1007/s10551-017-3460-3 .

Cowton, C. J., & San-Jose, L. (2016). On the ethics of trade credit: Understanding good payment practice in the supply chain. Journal of Business Ethics . doi: 10.1007/s10551-016-3050-9 .

Cugueró-Escofet, N., & Rosanas, J. M. (2016). The ethics of metrics: Overcoming the dysfunctional effects of performance measurements through justice. Journal of Business Ethics . doi: 10.1007/s10551-016-3049-2 .

Fassin, Y., & Drover, W. (2015). Ethics in entrepreneurial finance: Exploring problems in venture partner entry and exit. Journal of Business Ethics . doi: 10.1007/s10551-015-2873-0 .

Freeman, R. E. (1994). The politics of stakeholder theory: Some future directions. Business Ethics Quarterly, 4 (4), 409–429.

Article   Google Scholar  

Lagarde, C. (2014). Economic inclusion and financial integrity—An address to the conference on inclusive capitalism. London, May 27. Retrieved September 9, 2015, from https://www.imf.org/external/np/speeches/2014/052714.htm

Lail, B., MacGregor, J., Marcum, J., & Stuebs, M. (2015). Virtuous professionalism in accountants to avoid fraud and to restore financial reporting. Journal of Business Ethics . doi: 10.1007/s10551-015-2875-y .

Lokanan, M. E. (2015). Challenges to the fraud triangle: Questions on its usefulness. Accounting Forum, 39 (3), 201–224.

Macintyre, A. (1992). “Plain persons and moral philosophy: Rules, virtues and goods” American catholic philosophical quarterly (vol. 66 pp. 3–19) (Reprinted from The MacIntyre reader , pp. 136–152, by K. Knight, Ed., 1998, Cambridge: Polity Press.

Majoch, A. A. A., Hoepner, A. G. F., & Hebb, T. (2016). Sources of stakeholder salience in the responsible investment movement: Why do investors sign the principles for responsible investment? Journal of Business Ethics . doi: 10.1007/s10551-016-3057-2 .

Maniora, J. (2015). Is integrated reporting really the superior mechanism for the integration of ethics into the core business model? An Empirical Analysis. Journal of Business Ethics . doi: 10.1007/s10551-015-2874-z .

Melé, D. (2005). Ethical education in accounting: Integrating rules, values and virtues. Journal of Business Ethics 57 (1), 97–109.

Melé, D. (2012). Management ethics: Placing ethics at the core of good management . Basingstoke: Palgrave MacMillan.

Book   Google Scholar  

Melé, D., & González Canton, C. (2014). Human foundations of management. Understanding the homo humanus . Basingstoke: Palgrave-MacMillan.

Murphy, P., & Dacin, M. (2011). Psychological pathways to fraud: Understanding and preventing fraud in organizations. Journal of Business Ethics 101 (4), 601–618.

Observatoire de la Finance .(2008). Manifesto of Observatoire de la Finance. For finance that serves the common good . Retrieved September 9, 2015, from http://www.obsfin.ch/wp-content/uploads/Document/2011-ENG-Manifeste%20de%20l’Observatoire.pdf , In other languages, http://www.obsfin.ch/founding-texts/manifesto-for-finance-that-serves-the-common-good/

Pilaj, H. (2015). The choice architecture of sustainable and responsible investment: Nudging investors toward ethical decision-making. Journal of Business Ethics . doi: 10.1007/s10551-015-2877-9 .

Pope Francis. (2013). Evangelii Gaudium (The Joy of the Gospel). Retrieved September 9, 2015, from http://w2.vatican.va/content/francesco/en/apost_exhortations/documents/papa-francesco_esortazione-ap_20131124_evangelii-gaudium.html

Putnam, H. (2002). The collapse of the fact/value dichotomy and other essays . Cambridge, MA: Harvard University Press.

Sethi, S. P., Martell, T. F., & Demir, M. (2015). An evaluation of the quality of corporate social responsibility reports by some of the world’s largest financial institutions. Journal of Business Ethics . doi: 10.1007/s10551-015-2878-8 .

Soble, J. (2015). “Scandal upends Toshiba’s lauded reputation.” New York Times , July 22. Retreived from September 9, 2015, from www.nytimes.com/2015/07/22/business/international/toshiba-chief-and-7-others-resign-in-accounting-scandal.html?ref=topics&_r=0 )

Soltani, B. (2014). The anatomy of corporate fraud: A comparative analysis of high profile American and European corporate scandals. Journal of Business Ethics 120 (2), 251–274.

Vladu, A. B., Amat, O., & Cuzdriorean, D. D. (2016). Truthfulness in accounting: How to discriminate accounting manipulators from non-manipulators. Journal of Business Ethics . doi: 10.1007/s10551-016-3048-3 .

Download references

Author information

Authors and affiliations.

IESE Business School, University of Navarra, Av Pearson, 21, 08034, Barcelona, Spain

Domènec Melé, Josep M. Rosanas & Joan Fontrodona

You can also search for this author in PubMed   Google Scholar

Corresponding author

Correspondence to Domènec Melé .

Rights and permissions

Reprints and permissions

About this article

Melé, D., Rosanas, J.M. & Fontrodona, J. Ethics in Finance and Accounting: Editorial Introduction. J Bus Ethics 140 , 609–613 (2017). https://doi.org/10.1007/s10551-016-3328-y

Download citation

Received : 01 September 2016

Accepted : 09 September 2016

Published : 28 September 2016

Issue Date : February 2017

DOI : https://doi.org/10.1007/s10551-016-3328-y

Share this article

Anyone you share the following link with will be able to read this content:

Sorry, a shareable link is not currently available for this article.

Provided by the Springer Nature SharedIt content-sharing initiative

• Ethics in finance
• Ethics in accounting
• Managerial control systems
• The separation thesis
• Ethical rules
• Goods and virtues
• Find a journal
• Publish with us
• Track your research

Ethics in the Accounting Profession: A Challenge for the Future?

PDF Version Also Available for Download.

Description

Thesis written by a student in the UNT Honors College discussing the evolution of ethics within the accounting profession and the difficulties encountered when personal ethics conflict with the Code of Professional Conduct.

Physical Description

34, [13] p. ; 28 cm.

Creation Information

Gryn, Julie E. Autumn 1995.

This thesis or dissertation is part of the collection entitled: UNT Undergraduate Student Works and was provided by the UNT Honors College to the UNT Digital Library , a digital repository hosted by the UNT Libraries . It has been viewed 737 times. More information about this document can be viewed below.

People and organizations associated with either the creation of this thesis or dissertation or its content.

• Gryn, Julie E. University of North Texas

Thesis advisors

• Cox, Gloria C. University of North Texas; Director of Academic Core Programs
• Clay, Raymond, Jr. University of North Texas; Supervising Professor
• University of North Texas. Honors College. Place of Publication: Denton, Texas

Provided By

Unt honors college.

The UNT Honors College is dedicated to enriching the undergraduate academic experience for talented, motivated, and well-prepared students. The college offers its members many benefits, including challenging classes, training in research methods and skills, eligibility to live in Rawlins Hall or Honors Hall, and a supportive social and academic environment.

Descriptive information to help identify this thesis or dissertation. Follow the links below to find similar items on the Digital Library.

Degree Information

• Discipline: Accounting
• Grantor: University of North Texas
• Level: Bachelor's

Library of Congress Subject Headings

• Accounting.

University of North Texas Libraries Browse Structure

• Business, Economics and Finance
• Thesis or Dissertation

Unique identifying numbers for this document in the Digital Library or other systems.

• Accession or Local Control No : 1995-23_Gryn
• Archival Resource Key : ark:/67531/metadc146440

Collections

This document is part of the following collection of related materials.

UNT Undergraduate Student Works

This collection presents scholarly and artistic content created by undergraduate students. All materials have been previously accepted by a professional organization or approved by a faculty mentor. Most classroom assignments are not eligible for inclusion. The collection includes, but is not limited to Honors College theses, thesis supplemental files, professional presentations, articles, and posters. Some items in this collection are restricted to use by the UNT community.

What responsibilities do I have when using this thesis or dissertation?

Digital Files

• 47 image files available in multiple sizes
• 1 file (.pdf)
• Metadata API: descriptive and downloadable metadata available in other formats

Dates and time periods associated with this thesis or dissertation.

Creation Date

• Autumn 1995

Covered Time Period

• Into Modern Times, 1939-Present

Coverage Date

Added to the unt digital library.

• Feb. 28, 2013, 7:56 p.m.

Description Last Updated

• March 20, 2017, 12:16 p.m.

Usage Statistics

When was this document last used?

Geographical information about where this thesis or dissertation originated or about its content.

• United States

Publication Place

• Denton, Texas ( University of North Texas. Honors College. )

Map Information

• Repositioning map may be required for optimal printing.

Mapped Locations

Interact with this thesis or dissertation.

Here are some suggestions for what to do next.

Search Inside

• or search this site for other thesis or dissertations

Start Reading

• All Formats

Citations, Rights, Re-Use

• Citing this Document
• Responsibilities of Use
• Licensing and Permissions
• Linking and Embedding
• Copies and Reproductions

International Image Interoperability Framework

We support the IIIF Presentation API

Print / Share

Links for robots.

Helpful links in machine-readable formats.

Archival Resource Key (ARK)

• ERC Record: /ark:/67531/metadc146440/?
• Persistence Statement: /ark:/67531/metadc146440/??

International Image Interoperability Framework (IIIF)

• IIIF Manifest: /ark:/67531/metadc146440/manifest/

Metadata Formats

• UNTL Format: /ark:/67531/metadc146440/metadata.untl.xml
• DC RDF: /ark:/67531/metadc146440/metadata.dc.rdf
• DC XML: /ark:/67531/metadc146440/metadata.dc.xml
• OAI_DC : /oai/?verb=GetRecord&metadataPrefix=oai_dc&identifier=info:ark/67531/metadc146440
• METS : /ark:/67531/metadc146440/metadata.mets.xml
• OpenSearch Document: /ark:/67531/metadc146440/opensearch.xml
• Thumbnail: /ark:/67531/metadc146440/thumbnail/
• Small Image: /ark:/67531/metadc146440/small/
• In-text: /ark:/67531/metadc146440/urls.txt
• Usage Stats: /stats/stats.json?ark=ark:/67531/metadc146440

Gryn, Julie E. Ethics in the Accounting Profession: A Challenge for the Future? , thesis or dissertation , Autumn 1995; Denton, Texas . ( https://digital.library.unt.edu/ark:/67531/metadc146440/ : accessed May 23, 2024 ), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu ; crediting UNT Honors College .

An official website of the United States government

The .gov means it’s official. Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.

The site is secure. The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

• Publications
• Account settings

Preview improvements coming to the PMC website in October 2024. Learn More or Try it out now .

• Advanced Search
• Journal List
• v.6(6); 2020 Jun

Accountants perception of the factors influencing auditors' ethical behaviour in Nigeria

Adeleke clement adekoya.

a Afe Babalola University, Ado-Ekiti, Nigeria

Collins Sankay Oboh

b University of Lagos (UNILAG), Lagos, Nigeria

Obafemi Rufus Oyewumi

This paper examines the perception of accountants (chartered and non-chartered) of the personal factors influencing auditors' ethical behaviours in Nigeria. Data were obtained from 152 accountants (80 chartered and 72 non-chartered) in Lagos State Nigeria through the use of a well-structured questionnaire. The data collected were analysed using nonparametric tests (Wilcoxon rank-sum test and Mann–Whitney test) to check for differences in the perceptions of chartered and non-chartered accountants of the personal factors influencing auditors' ethical behaviours. The results showed that, except for auditors' age, there is a consensus in the perceptions of both chartered and non-chartered accountants of the personal factors influencing auditors' ethical behaviours. While there were significant divergent views on whether age influences auditors' ethical behaviours, fear of sanction, religion, upbringing, conscience, gender, and personal values were found to be influencers of auditors' ethical behaviours. The study offers value to professional accounting bodies in that it provides empirical explanations to guide the pursuit of sustainable and resilient ethical values among accounting professionals.

Ethical behaviours; Corruption; Auditors; Chartered accountants, Finance; Public finance; Accounting; Banking; Business; Entrepreneurship.

1. Introduction

Ethics is the bedrock of any responsible society and the basis for meaningful and sustainable development ( Oboh et al., 2020 ). True professionalism and societal formation are established upon sound ethical values which are the foundation for all other standards of performance ( Turpen and Witmer, 1997 ). Globally, the continuing decline of ethical values in organizations and societies has heightened the concerns for ethics studies in societies ( Transparency International, 2016 ; Oboh and Ajibolade, 2018 ; Oboh, 2019 ). In 2002, the appeal for ethics in business and accounting practices became amplified after the Enron and Andersen debacles. The outcome of the Enron and Andersen investigation only brought to bear what already was a deficiency in the very fibres of the business and professional communities ( Low et al., 2008 ; Arfaoui et al., 2016 ; Oboh, 2019 ; Oboh et al., 2020 ).

While the issue of unethical business and accounting practices has a long history ( Low et al., 2008 ; Koumbiadis, 2014 ), reported cases only surfaced in the 1970s with the 1976 scandal of Lockheed Corporation in the United States and the 1980 scandal of Nugan Hand Bank in Australia. Others include the scandals of Northguard Acceptance Ltd. in 1980–82 in Canada and ZZZZ Best in 1986 in the United States ( Murphy, 2015 ; Oboh, 2019 ). Recent cases include the scandals of Toshiba in 2015 in Japan; Alberta Motor Association in 2016 in Canada; and Odebrecht in 2016 in Brazil ( Rusnell, 2016 ; Associated Press, 2017 ; Inagaki, 2017 ; Oboh, 2018 , 2019 ; Enwereuzor et al., 2020 ). By implication, the recurring global headlines of financial scandals and the roles played by accountants and auditors have brought a dent on the image of the accounting profession's nobility ( Dellaportas, 2006 ; Bakre, 2007 ; Musbah et al., 2016 ; Oboh et al., 2020 ). Also, stakeholders remain surprised as regards the moral decline and unethical posture of public accountants ( Wokukwu, 2015 ; Herbert et al., 2016 ; Oboh, 2019 ; Enwereuzor et al., 2020 ).

In Nigeria, there have been several outcries over increasing incidents of corruption and unethical accounting practices ( Ogunleye, 2015 ; Ajibolade and Oboh, 2017 ; Oboh, 2019 ; Oboh et al., 2020 ). Despite increased government legislation and the presence of governance and professional ethics codes, as well as common integration of accounting ethics conversations in the academic curriculum, cases of unethical practices among accountants in both the public and private sectors subsist ( Bakre, 2007 ; Otusanya, 2010 ; Oboh and Ajibolade, 2018 ; Oboh et al., 2020 ). There are cases of collusion of accountants with companies' management and directors to falsify companies' accounts and the compromising stance of external auditors. Cadbury Nigeria Plc. suffered a major financial scandal in 2005, while Dunlop Nigeria Plc. liquidated in 2009. Likewise, Oceanic and Intercontinental banks collapsed, leaving hundreds of shareholders financially impaired ( Bakre, 2007 ; Ogunleye, 2015 ; Otusanya and Uadiale, 2014 ; Oboh and Ajibolade, 2018 ; Oboh, 2019 ).

Confronted with these ethical challenges among accounting professionals, coupled with the consistent rankings of African countries among most corrupt in the world ( Ajibolade and Oboh, 2017 ; Oboh, 2019 ) and the concerns expressed by different stakeholder groups for more business and professional ethics studies in Africa, this paper examines accountants' perceptions of the personal factors influencing the ethical behaviours of auditors in Nigeria, a developing country with high corruption profile and weak government institutions. While auditing is a major field in accounting and plays a significant role in lending credibility to companies' financial statements ( Adeyemi and Fagbemi, 2011 ), there is a dearth of ethics literature relating to auditing in developing countries, especially in countries with high corruption profiles and weak governments ( Oboh, 2019 ; Oboh et al., 2020 ). Thus, our paper is a significant response to the dearth of ethics literature in developing countries. The evidence in this paper could be used to predict auditors' ethical behaviours based on personal factors when faced with situations involving ethical dilemmas. Also, professional accounting bodies and accounting regulators could use the findings in this paper to address some ethical issues in the accountancy profession in Nigeria and other developing countries. Future research efforts could build on the findings of this paper regarding issues of auditors' ethical behaviours.

The other sections are arranged as follows: Section 2 presents the review of literature and hypotheses formulation. Section 3 discusses the research methods adopted for the paper. Section 4 presents the results and discussions, while section 5 summarises and concludes the paper.

2. Literature review

Ethics, as explained by Bovee et al. (2006) , is the principles and criteria for moral conduct on what is “right” as opposed to the “wrong”, which society has adopted for its existence. Morf et al. (1999) described ethics as concerned with moral commitment, responsibility and social justice of all parties involved in the process of decision making. Every professional association is established upon a generally accepted body of knowledge, a widely recognized standard of attainment and enforceable codes of ethics ( Smith et al., 2005 ; Karaibrahimoglu et al., 2009 ). These codes of ethics guide and shape members' behaviour and enable them to resolve ambiguity or contentious issues concerning ethical conduct ( Crebert et al., 2011 ). At times, it is difficult to judge what may be right or wrong in certain situations without some frame of reference. Hence, ethics deals with well-based standards of how individuals or professionals ought to act. It does not describe the way they do act; it deals with the way they should act, and it is prescriptive (normative), not descriptive ( Mintz and Morris, 2008 ).

In accounting, ethics is primarily an instrument, which prescribes behaviours outlined in accordance with accounting principles, which is regarded as the underpinning for all other standards of professional conducts and performance ( Turpen and Witmer, 1997 ). Ethical standards and behaviours in accounting can be expressed as performing the accounting duties in accordance with Generally Accepted Accounting Principles (GAAP) such as reliability, accuracy, objectivity and transparency ( Karaibrahimoglu et al., 2009 ). These standards of conduct are heavily influenced by the profession's specifications, national laws and the expectations of the society ( Mintz and Morris, 2008 ).

In the literature, Kohlberg's cognitive reasoning and moral development (CMD) theory has been widely applied in understanding ethical principles and behaviours among accounting professionals ( Ogunleye, 2015 ; Musbah et al., 2016 ; Karaibrahimoglu et al., 2009 ; Oboh and Ajibolade, 2018 ; Oboh, 2019 ). Kohlberg (1973) proposes, as a reformulation of Piaget's progression from heteronomy to autonomy, a developmental model in six stages with three levels ( Barron, 2015 ; Schepers, 2017 ). This theory assumes six stages of moral reasoning, which an individual can only pass to the next stage based on the developments of his/her belief systems ( Kohlberg, 1973 ; Weber, 1991 ). The first of which is obedience to rules motivated by the avoidance of punishment and the second, obedience influenced by rewards (personal benefits). Generally, these stages (stages 1 and 2) make up the pre-conventional level of morality. At this level of morality, Kohlberg (1973) argued that an individual responds to thoughts of ‘right’ or ‘wrong,’ especially when expressed in terms of consequences of action (punishment, rewards, exchange of favours), or imposition of physical power by those enunciating the rules ( Kohlberg, 1973 ; Mintz and Morris, 2008 ; Musbah, 2010 ; Weber, 1991 ; Schepers, 2017 ).

The third and fourth stages, of Kohlberg's theory, consist of obedience influenced by fairness to others and by law and order ( Kohlberg, 1973 ; Mintz and Morris, 2008 ). At this level of morality, Kohlberg (1973) believed an individual would act ethically with a sense of responsibility to maintain the expectations of others, and not necessarily for fear of punishment or envisaged rewards. The individual thinks he should be fair to others, especially those in his/her group (family, peers, colleagues, etc.), and that he/she owes the society the obligation to be ethical as a generalized member of society ( Weber, 1991 ).

In the fifth and sixth stages, the basic understanding of the fundamental rights to liberty and life, the principle of human rights and the recognition of the universal principle of rules and regulation characterized individuals' moral development ( Kohlberg, 1973 ; Schepers, 2017 ). These stages (stages 5 and 6) make up the post-conventional morality level. At stage five, Kohlberg (1973) believed right action is defined in terms of general individual rights and in terms of standards, which have been critically examined and agreed upon by the whole society ( Weber, 1991 ). Individuals will act ethically because to do so, would benefits society more. Unlike the rigidity of maintaining the laws in stage four, stage five emphasizes flexibility in the law in terms of rational considerations of social utility (‘ utilitarianism ’) ( Weber, 1991 ; Kohlberg, 1973 ). At stage six, the laws are valid only if they are grounded in justice, and a commitment to justice carries with it an obligation to disobey unjust laws. Here, ethicality is defined by the decision of conscience in accord with self-chosen ethical principles appealing to logical comprehensiveness, universality, and consistency ( Barron, 2015 ; Mintz and Morris, 2008 ).

Generally, accountants perform their work in many different areas and sectors of human endeavours, which involve serious ethical concerns. Likewise, various opportunities exist in their work to engage in unethical behaviour ( Mele, 2005 ). Hence, as a profession, there are specified guidelines and codes of conduct that guide accountants on how to conduct themselves in the discharge of their duties as public interest protectors. Bakre (2007) noted that in some quarters, there are claims that the foundation of the operating activities of the accounting profession are the central elements of ideologies such as the prescription that the occupation will encourage and maintain high professional standards, ethical conduct, moral integrity and hence give impartial service to the public. On account of the indispensable roles accounting play in human endeavours and the global economy, scholars have sought to understand, from different dimensions, what would make highly skilled professionals, well remunerated, charged with the responsibility of protecting the interests of the public in financial matters, behaviour contrary to professional standards ( Oboh and Ajibolade, 2018 ).

Hitherto, Psychologists believed there are intrinsic factors that may contribute to moulding and shaping individuals cognitive reasoning and ethical values. Accounting scholars also believed these factors influence, motivate and compel accountants to behave ethically when faced with situations or decisions that may be unclear or ambiguous on what the ethical stance should be ( Dellaportas, 2006 ; Oboh and Ajibolade, 2018 ; Oboh, 2019 ). Mintz and Morris (2008) argued that an individual may know what is ethical and have the desire to act ethically, but may be influenced by pressures, internally and externally, to act otherwise. Kohlberg (1973) believed an individual's ability to make ethical judgement develops in stages and is affected by certain factors, which are both internal and external to the individual ( Kohlberg, 1973 ). In the literature, there is yet to be a consensual persuasion on the factors influencing the ethical values and behaviours of accounting professionals. It is still a contentious discourse among academics on the way ethical values are acquired. Some of the factors that have been found to influence the moral development of individuals include perception, experiences, environment, family, personality and education ( Oboh, 2019 ; Nathan, 2015 ; Karaibrahimoglu et al., 2009 ; Musbah et al., 2016 ; Marques and Azevedo-Pereira, 2009 ; Oboh et al., 2020 ).

This paper, therefore, examines accountants' perception of some of the factors that may influence auditors' ethical behaviour. It assesses the extent to which stakeholders perceive certain intrinsic factors to influence auditors' ethical behaviours. Generally, these factors are grouped into two broad categories, namely: personal and external factors ( Mintz and Morris, 2008 ). However, this paper takes a detailed look at the personal factors that may influence the behaviours of accountants in auditing firms.

2.1. Personal factors and ethical behaviour

In literature, some of the personal factors that have been found to influence individuals' cognitive reasoning, moral development, ethical behaviour and decision making include age, gender, upbringing, personal values, fear of punishment, conscience and religion ( Musbah et al., 2016 ; Kohlberg, 1973 ; Oboh and Ajibolade, 2018 ; Oboh, 2019 ).

The study of Marques and Azevedo-Pereira (2009) examined the ethical ideology and ethical judgments in the Portuguese accounting profession. Their findings suggest that age and gender significantly determine the ethical judgment and values of accounting professionals in Portuguese. They further reported that ethical judgment did not differ significantly based on ethical ideologies (personal moral philosophy – ‘ personal values ’) among the respondents. Kurpis et al. (2008) investigated the effects of commitment to moral self-improvement and religiosity on the ethics of business students. The study found religion and commitment to moral self-improvement to be significant predictors of perceived importance of ethics, ethical problem recognition, and ethical behavioural intentions among the students. Although, the findings of Rawwas et al. (2006) suggest that religion has less influence on ethical behaviour; however, the reason for this outcome was based on the special characteristics of the Japanese culture. Among the religious respondents' group, age and gender were found to be possible predictors of ethical behaviours compared to the secular respondents' group ( Rawwas et al., 2006 ).

From the study of Ogunleye (2015) , it was reported that various situational and demographic factors significantly influence the ethical perception and predisposition of Nigerian accountants. The study found that age, gender, culture and religiosity significantly influence the ethical perception and predisposition of accountants. Female accountants were found to be more ethically disposed than their male counterparts. In Musbah et al. (2016) , the role of individual and organizational variables and moral intensity dimensions in Libyan management accountants' ethical decision making were examined. From their findings, a slight significant relationship was reported between age, gender, educational level and personal moral philosophy (personal values) and ethical decision making. Contrasting Ogunleye (2015) on gender influence on ethical decision-making, Musbah et al. (2016) found male accountants to display more ethical traits than their female counterparts.

Nathan (2015) , akin to Ogunleye (2015) , found that the ethical standards of female participants were less affected by societal influences than that of their male counterparts. Evidence from the study of Tilley (2010) signals gender differences in ethical decision-making, noting that both genders change their behaviour to select more ethical options when a kinship factor is involved. Generally, the results and evidence on gender differences and individual ethical behaviour have been mixed ( Becker and Ulstad, 2007 ; Valentine et al., 2009 ; Valentine and Rittenburg, 2007 ).

The study of Becker and Ulstad (2007) suggests that biological gender has been found to have an impact on ethical behaviour, of which the female gender demonstrates to be more ethical than the male. Buckley et al. (1998) argued that social conditioning may lead males toward unethical action more often than females, especially when they feel the end justifies the means. This, therefore, supports the debate of gender socialization theory, which holds that men and women bring different ethical standards and values to the work environment ( Dawson, 1995 ).

In reality, men and women differ considerably in moral reasoning processes, irrespective of whatever decisions they may make in given circumstances ( Dawson, 1995 ; Tilley, 2010 ). Valentine and Rittenburg (2007) and Valentine et al. (2009) affirmed that, on average, women are more ethical than men. Hitherto, there is no consensus on gender influence on ethical reasoning and behaviour. From the findings of Bobek et al. (2015) , professional role, decision context, gender influence and moral intensity significantly related to males' decision making, than females.

Affiliated to the influence of conscience in ethical reasoning, behaviour and decision making, Thilly (1900) noted that certain feelings and impulses surround the idea of a deed and lead individuals to make judgments. These feelings and impulses are the products of the inner voice, or inward eye (conscience), as sometimes referred. Thilly (1900) argued that conscience is not an independent or separate faculty as common sense would hold, but a complex of psychical states and that the characteristic emotional and impulsive elements peculiar to it are the feelings of approval (or disapproval) and the feelings of obligation. It judges and it is cognitive or intellectual in personality. Hence, conscience functions (‘ warns’ or ‘ condemns ’) both before and after the performance of an act.

Howard (1910) , citing Sainte-Beuve, noted that for a Frenchman, the first consideration is not whether he is amused or touched by a work of art or mind. What he seeks above all to learn is, whether he was right in being amused and moved by it, and in applauding it. Thus, Howard (1910) stated that:

‘A Frenchman has, to a considerable degree, what one may call a conscience in intellectual matters; he has an active belief that there is a right and a wrong in them, that he is bound to honour and obey the right, that he is disgraced by cleaving to the wrong’ (p. 486).

Undoubtedly, every individual has or professes to have a conscience in moral matters. According to Howard (1910) , the word conscience is narrowed, in popular use, to the moral sphere, because this lively susceptibility of feeling is, in the moral sphere, so far more common than in the intellectual sphere. It has become a man's inclination to admit a high standard of conduct and a perfect authoritative model in correcting his everyday moral behaviours.

According to Lyons (2009) , conscience is an inner voice of special moral illumination or expertise and of incontrovertible moral authority, which reveals itself inwardly and unavoidably in consciousness and warns us to do good and avoid evil, while condemning us when we fail. To complement Lyons (2009) , Hansen (2011) suggested that conscience forms the connection between God and man. It is an original principle and a messenger from God who, both in nature and in grace, speaks to us behind a veil (1 John 3:20, King James Version). At times, conscience may be more related to faith and identity ( Cummings, 2009 ). Eberle (2007) noted that obedience to the dictates of conscience is an important moral good when exhibited by the citizenry, and it is no less good when exhibited by the inhabitants of other social roles.

This study, akin to these persuasions on the interrelationship between conscience and moral behaviours, argues that conscience is the inner voice or inward eye in every individual, which, to a considerable degree, influences, motivates, justifies or condemns individuals' conducts. It is a significant personal factor that may influence auditors' ethical reasoning and behaviour ( Oboh and Ajibolade, 2018 ). Perhaps, what Kohlberg (1973) referred to as universal ethical principles in stage six of the theory of moral development, may be linked to an active conscience that ought to guide the conducts of every individual irrespective of societal norms or legal laws. As hypothesized by Fuss (1964) , conscience is the very marrow of the moral life. Embedded in conscience is the complete law of nature, which universally confined individuals to appreciate what is good as against the bad. It is the very voice of nature ( Marks, 2006 ).

Still on personal factors, ‘age’ ( Ogunleye, 2015 ; Musbah et al., 2016 ) and ‘personal or individual values’ ( Musbah et al., 2016 ; Oboh, 2019 ) have been found to be significant determinants of ethical reasoning, decision and behaviour. Equally, ‘religion’ ( Ogunleye, 2015 ) and ‘upbringing’ – home training ( Ilmi, 2011 ; Oboh, 2019 ) play significant roles in influencing individuals' values and behaviour. In Proverbs 22:6 (King James Version), it says that “ train up a child in the way he should go: and when he is old, he will not depart from it .” According to anecdotal reports, Arthur Andersen's mother had a significant influence on his moral beliefs and conducts. She had schooled him in a Scandinavian axiom — “ Think straight, talk straight ”. These ethical values learnt from his mother during his growing up days, guided Arthur Andersen into building one of the world's largest accounting firms before the Enron scandal in 2002 that led to the collapse of the firm ( Trevino and Blown, 2004 ; Oboh, 2019 ).

Overtly, to a considerable degree, the moral perception and disposition of an individual has a link to his/her religious beliefs and growing up experience. In educational discourses, it is generally accepted that all children are defined as blank slates (‘ tabula rasa ’) that need moral inscription. Both teachers and a child's family members are acknowledged as essential means by which children can be imprinted with the right moral values and, thus, socialized ( Rydstrøm, 2001 ; Oboh, 2019 ). Given that the results of the influences of some of the personal factors on individuals' cognitive reasoning, values and ethical decision and behaviour are mixed; this paper considers the views of accountants, who are considered critical stakeholders and the lifeblood of any auditing firm, and thus, hypothesizes that:

H1: the perceptions of chartered accountants and non-chartered accountants' stakeholders groups of the personal factors influencing auditors' ethical behaviours are not significantly different.

By chartered accountants, this paper refers to professionally qualified accountants of the Institute of Chartered Accountants of Nigeria (ICAN); while the non-chartered accountants are those without a professional qualification or those with other qualifications different from what is offered by ICAN. ICAN is the foremost accounting professional body in Nigeria and has been at the forefront of giving directions and adopting internationally accepted standards to regulate the activities of her members.

This paper is not an experimental study but a survey of the opinions of accountants (chartered and non-chartered) of the personal factors influencing auditors' ethical behaviour in Nigeria, and thus, does not require an ethical approval from an ethics committee. Accordingly, by way of cross-sectional survey design, data were collected from willing accountants (chartered and non-chartered) to examine their perceptions of the personal factors influencing auditors' ethical behaviour in Nigeria. The choice of this design was based upon the fact that it helps to elicit data from the study's sample objectively to generalize on the population.

A total of 200 accountants were surveyed using a structured questionnaire of which 160 (80%) copies were completed and returned. The physical copies of the questionnaire were distributed manually to the respondents. After due scrutiny of the returned copies of the questionnaire, 152 (76%) copies were found to be usable for analysis.

Upon the development of the instrument, the initial draft was subjected to content and face validity tests with the assistance of two accounting scholars and a professor of research methodology and statistics. Their constructive criticism and suggestions aided the final version of the instrument. As earlier mentioned, this study is a perceptual study. It samples the opinions and perceptions of two stakeholder groups (chartered and non-chartered accountants) on certain personal factors that influence auditors' ethical behaviour on a 5-point Likert scale of agreement [from (5) ‘Strongly agree’ to (1) ‘Strongly disagree’] and scale of influence [from (5) ‘overwhelming influence’ to (1) ‘no influence’] to evaluate their opinions. Descriptive and inferential statistics were employed in analysing the data collected.

Descriptive statistics were performed to present a summary of the demographic information of the respondents and their perceptions of the general ethical climate of the accounting profession in Nigeria. Each questionnaire item was analysed using frequenting and cross-tabulation analysis. The inferential statistics were performed at a 0.05 level of significance on the ordinal data collected. Specifically, Wilcoxon rank-sum test and Mann–Whitney test were performed to test for difference in the perceptions of the two independent stakeholders (chartered and non-chartered accountants) groups on the factors influencing auditors' ethical behaviours.

4.1. Descriptive statistics

To begin, descriptive analysis was performed to assess the accountants' demographic composition and characteristics. The outcome of this analysis provided a level of assessment of the accountants' understanding and ability to provide valid responses to the questionnaire items without bias.

From Table 1 , the gender distribution of the respondents shows a bias towards the male gender, with about 71.7% males and 28.3% females. This outcome indicates that the opinions expressed in this study represent more of the view of the male gender. This is a reflection of the general gender demography in Nigeria where there are more male accountants than female accountants in the profession. Furthermore, the respondents were asked to indicate their area of speciality in the field of accounting. The outcome of this analysis, as reported in Table 1 , shows that 40.1% specialized in financial accounting, 9.9% in taxation, 11.2% in management accounting, 30.2% in auditing, 0.7% in forensic accounting and 7.9% in other areas such as government accounting as indicated in the questionnaire. This outcome indicates that majority of the respondents are specialists in financial accounting and auditing. This overtly represents the generality of distribution of accountants in Nigeria as more accountants are specializing in these two fields of accounting because of the job prospects. Besides, management accounting and forensic accounting in Nigeria are yet to gain a recognizable pre-eminence in practice, while not many accountants are interested in the practice of taxation in Nigeria.

Table 1

Respondents' personal information.

Table 1 also indicates that 58.5% of the respondents are first degree (HND/B.Sc.) holders, 36.2% possess second degree (MBA/M.Sc.) qualification, about 3.3% possess third degree (Ph.D.) qualification, while 2% possess other forms of qualifications other than the ones indicated in the questionnaire. This simply implies that the respondents are a group of learned and exposed individuals who have spent at least a minimum of four years in an academic discipline or training. Hence, responses obtained for analysis were elicited from individuals who can both read and comprehend items contained in the research instrument.

Furthermore, as presented in Table 1 , 41.4% of the respondents have worked for at least one to four years, 25% for about six to nine years, 13.2% for about eleven to fourteen years, 6.6% for about sixteen to nineteen years, and 13.8% for about twenty years and above. This suggests that majority of the respondents (58.6%) have practical experiences as accountants for about six to twenty years, and beyond. This, therefore, implies that the respondents are a group of professionals exposed both to academic training and practical experiences as accountants; hence, adding credibility to the responses provided by them.

Also, Table 1 shows that 52.6% of the respondents are chartered accountants, while 47.4% are yet to be chartered. This simply implies that the opinions presented in this study represent the view of both chartered accountant and non-chartered accountants. Being a chartered accountant signifies that the accountant in question has undergone training and passed all the required examinations to become a member of an Accounting body recognised in Nigeria. Individuals who are considered non-chartered accountants are yet to meet the requirements for such membership (including passing examinations), but are nonetheless working in the capacity of an accountant in various organisations, or are accounting graduates, holding positions that are not strictly reserved for accountants. In summary, the composition of the respondents to a large extent validates their responses to the topical issues outlined in the questionnaire. That is, responses provided by the respondents are valid and reliable because they have been obtained from qualified individuals with in-depth knowledge of the subject matter.

The respondents were asked to rate the ethical behaviour of an average accountant in Nigeria on a six-point-scale measure (6, Excellent to 1, very poor). The results showed that half of the respondents (38, chartered and 38, non-chartered accountants = 76) perceive the ethical behaviour of an average Nigerian accountant is ‘satisfactory’. However, 43 respondents (24, chartered and 19, non-chartered accountants) consider the behaviour as ‘poor’, while 29 respondents (16, chartered and 13, non-chartered accountants) perceived the behaviour as ‘good’. Also, 2 respondents (1, chartered and 1, non-chartered accountant) perceived the behaviour as ‘excellent’, while the remaining 2 respondents (1, chartered and 1, non-chartered accountant) perceived the behaviour as ‘very poor’. Generally, the ethical behaviour of an average accountant in Nigeria is still perceived to be satisfactory.

Furthermore, the study examined the extent of influence the perceived personal factors have on auditors' ethical behaviours in Nigeria. A Cross-tabulation analysis was used to examine respondents' responses to each factor. Table 2 present the results of this analysis.

Cross-tabulation analysis of the perceived influence of personal factors on auditors' ethical behaviour.

The results suggest that both groups of accountants (36 chartered and 24 non-chartered accountants) perceived religion as having some influence on auditors' ethical behaviours. In total, 117 accountants (63 chartered and 54 non-chartered accountants) perceived religion to have a considerable influence on auditors' ethical behaviours, while 35 respondents (17 chartered and 18 non-chartered accountants) perceived religion to have little or no influence on auditors' ethical behaviour.

On the influence of upbringing on auditors' ethical behaviours, the results displayed in Table 2 suggest that both groups of respondents (45 chartered and 42 non-chartered accountants) perceived upbringing to have a lot of influence on auditors' ethical behaviours. In total, 144 respondents (75 chartered and 69 non-chartered accountants) perceived upbringing to have a considerable influence on auditors' ethical behaviours, while only 8 respondents (5 chartered and 3 non-chartered accountants) perceived upbringing to have little or no influence on auditors' ethical behaviour.

With regard to the influence of conscience on auditors' ethical behaviour, the results suggest that both groups of respondents (37 chartered and 36 non-chartered accountants) perceived conscience to have a lot of influence on auditors' ethical behaviours. In total, 138 respondents (72 chartered and 66 non-chartered accountants) perceived conscience to have a considerable influence on auditors' ethical behaviours, while 14 respondents (9 chartered and 5 non-chartered accountants) perceived conscience to have little or no influence on auditors' ethical behaviour.

Concerning the influence of auditors' gender on their ethical behaviours, the results suggest that both groups of respondents (24 chartered and 35 non-chartered accountants) perceived gender to not influence auditors' ethical behaviours. In total, 35 respondents (18 chartered and 17 non-chartered accountants) perceived gender to have some influence on auditors' ethical behaviour, while 117 respondents (62 chartered and 55 non-chartered accountants) perceived gender to have little or no influence on auditors' ethical behaviours.

On the influence of auditors' age on their ethical behaviours, the results suggest that both groups (32 chartered and 22 non-chartered accountants) perceived auditors' age to have little influence on their ethical behaviours. In total, 103 respondents (51 chartered and 52 non-chartered accountants) perceived auditors' age to have little or no influence on their ethical behaviours, while 49 respondents (29 chartered and 20 non-chartered accountants) perceived auditors' age to have some influence on their ethical behaviour.

Regarding the influence of fear of sanction on auditors' ethical behaviour, the results suggest that both groups (39 chartered and 27 non-chartered accountants) perceived that the fear of sanction has a lot of influence on auditors' ethical behaviours. In total, 139 respondents (72 chartered and 67 non-chartered accountants) perceived the fear of sanction to have considerable influence on auditors' ethical behaviours, while only 13 stakeholders (8 chartered and 5 non-chartered accountants) perceived the fear of sanction to have little influence on auditors' ethical behaviour.

Finally, concerning the influence of auditors' values on their ethical behaviours, the results suggest that both groups (36 chartered and 32 non-chartered accountants) perceived that auditors' values have an overwhelming influence on their ethical behaviours. In total, 147 stakeholders (77 chartered and 70 non-chartered accountants) perceived the personal values of auditors have an overwhelming influence on their ethical behaviours, while only 5 stakeholders (3 chartered and 2 non-chartered accountants) perceived the personal values of auditors to have little influence on their ethical behaviours.

4.2. Test of hypothesis

From the descriptive analysis, it is apparent that accountants (chartered and non-chartered accountants) perceived the identified personal factors as significant influencers of auditors' ethical behaviours. To make inferences and generalization on the outcome of the descriptive analysis, Wilcoxon rank-sum test and Mann–Whitney test were performed to test the study's hypotheses with the aid of SPSS version 21. These tests are the non-parametric equivalent of the independent samples t-test ( Field, 2009 ). These tests were adopted instead of the t-test because the data are non-parametric, as they do not fulfil all the conditions of parametric data. The results of the tests are shown in Table 2 .

From Table 3 , with the exception of age (.037 < .05), the p-values for religion (.868 > .05), home training (.207 > .05), conscience (.609 > .05), gender (.115 > .05), fear of sanction (.404 > .05) and personal values (.922 > .05) suggest no significant difference in the perceptions of chartered and non-chartered accountants of the personal factors influencing auditors' ethical behaviours in Nigeria. That is, there is a consensus perception among the stakeholders that these personal factors influence auditors' ethical behaviours. However, concerning age, there is no such agreement (.037 < .05), the test outcome shows that there is a clear distinction in the perception of the two groups of accountants considered in this study on auditors' ethical behaviour.

Table 3

Personal factors and auditors ethical behaviours.

5. Discussion

The results revealed that both chartered and non-chartered accountants view fear of sanction, religion, upbringing, conscience, gender, and personal values in relatively the same way as influencers of an auditor's ethical behaviour. This consensus in opinion suggests that each of these factors inherently defines who an accountant in an audit firm truly is, and hence dictates how he behaves, particularly in the discharge of his responsibilities. The fact that sanctions are in place for unethical behaviour will greatly serve as a deterrent for auditors to behave is such a manner. Also, religion with all the challenges that come with it may have its value in helping to inculcate good ethical behaviour in potential auditors. The same principle works with upbringing, which reflects how an individual was raised by parents or guardians. However, the stakeholders perceived differently the extent to which age and gender influence auditors' ethical behaviours. This outcome confirms the mixed results in ethics literature on the influence of gender and age on ethical behaviours. Whereas the study of Ogunleye (2015) and Nathan (2015) reported a significant relationship between gender, age and ethical decision, the study of Musbah et al. (2016) reported a slight significant relationship between these demographic variables and ethical decision making. Although, Kohlberg (1973) argued that, as individuals grow older, they graduate from one stage of morality to another in the six-stage level of morality, supposing the influence of age on ethical behaviours.

Hitherto, scholars have suggested that the foundation for true development in any economy is laid upon a reputable system of ethical principles. That is, the success of a society, organization or profession cannot be disassociated from a strict commitment to and an observance of sound ethical values. Hence, one major implication of this paper is that it will draw the attention of professional accounting bodies in Nigeria to re-examine their stance on ethical issues relating to the profession. Also, attention will be drawn to the need for the integration of ethics courses into the undergraduate accounting curriculum to foster ethical values among accounting professionals in Nigeria. Accounting students (undergraduates and postgraduates) should regularly be exposed to seminars and symposia on ethical issues in the profession to help them develop high personal and professional ethical values. The attention of the Government will also be drawn to the fact that the environment creates an atmosphere for unethical accounting practices to thrive. The government should look inward to devise measure on how to edge unethical practices among accounting professionals. Stricter measures of sanctions should be put in place to debar unethical accounting practices.

6. Conclusion and recommendations

Given the findings above, this paper concludes that personal factors play a crucial role in determining how an auditor behaves in examining the books of clients and expressing an opinion thereon. Hence the fear of sanction, religion, upbringing, conscience, gender, and personal values of individuals working with audit firms go a long way to determine how they will act on the job and ultimately influence the position and performance of the audit firm as a whole. It is therefore recommended that much emphasis should be placed on these personal factors in the lives of the individuals that are to be employed or engaged by audit firms in the discharge of their duties to their clients. This should be complemented with continuous training on ethics, particularly as it has to do with the accounting profession and audit practice.

6.1. Limitation and future research

Like prior business ethics studies, there are some limitations to the methods adopted in this paper. Firstly, it simply examined the perceptions of the sampled respondents. Hence, the findings represent the opinions and perceptions of the sample drawn from the population and not their behaviour. However, it is a reflection of the population since the samples were drawn randomly. Furthermore, an experimental study may be required to validate the accountants' perception of the influence of age on auditors' ethical behaviours.

This paper lends its voice to call for more research efforts in the area of business and professional ethics in Africa. Hitherto, there is still a dearth of empirical evidence on professional and business ethics studies in Africa. Also, further studies could be conducted using more advance methodologies to provide an empirical explanation on the effect of conscience, upbringing and fear of God on the ethical decisions of accounting professionals.

Declarations

Author contribution statement.

Adeleke Clement Adekoya: Conceived and designed the study; Analyzed and interpreted the data; Wrote the paper.

Collins Sankay Oboh: Conceived and designed the study; Analyzed and interpreted the data; Contributed reagents, materials, analysis tools or data; Wrote the paper.

Obafemi Rufus Oyewumi: Analyzed and interpreted the data; Wrote the paper.

Funding statement

This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.

Competing interest statement

The authors declare no conflict of interest.

Additional information

No additional information is available for this paper.

• Adeyemi S.B., Fagbemi T.O. The perception of ethics in auditing profession in Nigeria. J. Account. Tax. 2011; 5 (7):146–157. [ Google Scholar ]
• 2017. Associated Press
• Ajibolade S.O., Oboh C.S. A critical examination of government budgeting and public funds management in Nigeria. Int. J. Publ. Leader. 2017; 13 (4):218–242. [ Google Scholar ]
• Arfaoui F., Damak-Ayadi S., Ghram R., Bouchekoua A. Ethics education and accounting students’ level of moral development: experimental design in Tunisian audit context. J. Bus. Ethics. 2016; 138 :161–173. [ Google Scholar ]
• Bakre O.M. The unethical practices of accountants and auditors and the compromising stance of professional bodies in the corporate world: evidence from corporate Nigeria. Account. Forum. 2007; 31 (3):277–303. [ Google Scholar ]
• Barron K. A conceptual analysis of cognitive moral development and voice behavior in an organization. Int. J. Busines. Publ. Admin. 2015; 12 (2):55–65. [ Google Scholar ]
• Becker D.A., Ulstad I. Gender differences in Student ethics: are females really more ethical? Plagiary. 2007:77–91. [ Google Scholar ]
• Bobek D.D., Hageman A.M., Radtke R.R. The effects of professional role, decision context, and gender on the ethical decision making of public accounting professionals. Behav. Res. Account. 2015; 27 (1):55–78. [ Google Scholar ]
• Bovee C.L., Thill J.V., Mescon M.H. third ed. Prentice-Hall; New Jersey: 2006. Excellence in Business. [ Google Scholar ]
• Buckley M.R., Wiese D.S., Harvey M.G. An investigation into the dimensions of unethical behavior. J. Educ. Bus. 1998; 73 (5):284–290. [ Google Scholar ]
• Crebert G., Patrick C.J., Cragnolini V., Smith C., Worsfold K., Webb F. second ed. Griffith University; Australia: 2011. Ethical Behaviour and Social Responsibility Toolkit. https://www.griffith.edu.au Retrieved from. [ Google Scholar ]
• Cummings B. Conscience and the law in Thomas more. Renaiss. Stud. 2009; 23 (4):463–485. [ Google Scholar ]
• Dawson L.M. Women and men, morality and ethics. Bus. Horiz. 1995:61–68. July-August. [ Google Scholar ]
• Dellaportas S. Making a difference with a discrete course on accounting ethics. J. Bus. Ethics. 2006; 65 (4):391–404. [ Google Scholar ]
• Eberle C.J. God, war, and conscience. J. Relig. Ethics. 2007; 35 (3):479–507. [ Google Scholar ]
• Enwereuzor I.K., Onyishi I.E., Albi-Oparaocha F.C., Amaeshi K. Perceived leader integrity as a mediator between ethical leadership and ethical climate in a teaching context. BMC Psychol. 2020; 8 (1):1–11. [ PMC free article ] [ PubMed ] [ Google Scholar ]
• Field A. third ed. SAGE; London: 2009. Discovering Statistics Using SPSS. [ Google Scholar ]
• Fuss P. Conscience. Ethics. 1964; 74 (2):111–120. [ Google Scholar ]
• Hansen C. Newman, conscience and authority. N. Blackfriars. 2011; 92 (1038):209–223. [ Google Scholar ]
• Herbert W.E., Anyahara I.O., Okoroafor E.N., Onyilo F. Financial reporting council of Nigeria and the future of accounting profession in Nigeria. Int. J. Finance Account. 2016; 5 (3):146–157. [ Google Scholar ]
• Howard W.G. Good taste and conscience. Publ. Mod. Lang. Assoc. (PMLA) 1910; 25 (3):486–497. [ Google Scholar ]
• Ilmi A. The white gaze vs. the black soul. Race Gender Class. 2011; 18 (3/4):217–229. [ Google Scholar ]
• Inagaki K. Financial Times; 4 January 2017. Toshiba Rattled by a Report of Fresh Scandal Evidence. https://www.ft.com/content/7cfd3c68-d23a-11e6-b06b-680c49b4b4c0?mhq5j=e2 Retrieved from. [ Google Scholar ]
• Karaibrahimoglu Y.Z., Erdener E., Var T. Ethical behaviours in accounting: some evidence from Turkey. Afr. J. Bus. Manag. 2009; 3 (10):540–547. [ Google Scholar ]
• Koumbiadis N. Morality, ethical awareness and ethical behavior in business: challenges for twenty-first century organizations. J. Account. Organ. Change. 2014; 10 (2) doi: 10.1108/JAOC-10-2013-0082. [ CrossRef ] [ Google Scholar ]
• Kohlberg L. The claim to moral adequacy of a highest stage of moral judgment. J. Philos. 1973; 70 (18):630–646. [ Google Scholar ]
• Kurpis L.V., Beqiri M.S., Hedgeson J.G. The effects of commitment to moral self-improvement and religiosity on ethics of business students. J. Bus. Ethics. 2008; 80 (3):447–463. [ Google Scholar ]
• Low M., Davey H., Hooper K. Accounting scandals, ethical dilemmas and educational challenges. Crit. Perspect. Account. 2008; 19 :222–254. [ Google Scholar ]
• Lyons W. Conscience - an essay in moral psychology. Philosophy. 2009; 84 (330):477–494. [ Google Scholar ]
• Marks J. The divine instinct? Rousseau and conscience. Rev. Polit. 2006; 68 (4):564–585. [ Google Scholar ]
• Marques P.A., Azevedo-Pereira J. Ethical ideology and ethical judgments in the Portuguese accounting profession. J. Bus. Ethics. 2009; 86 :227–242. [ Google Scholar ]
• Mele D. Ethical education in accounting: integrating rules, Values and Virtues. J. Bus. Ethics. 2005; 57 :97–109. [ Google Scholar ]
• Mintz S.M., Morris R.E. McGraw-Hill Companies; New York: 2008. Ethical Obligations and Decision Making in Accounting: Text and Cases. [ Google Scholar ]
• Morf D.A., Schumacher M.G., Vitell S.J. A survey of ethics officers in large organizations. J. Bus. Ethics. 1999; 20 (3):265–271. [ Google Scholar ]
• Murphy D. Nugan Hand bank mystery: michael Hand found living in the United States. 2015. http://www.smh.com.au/business/bankingandfinance/nuganhandbankmysterymichaelhadfoundlivingintheunitedstates20151107gkthas.html Retrieved from.
• Musbah A.Y.S. 2010. The Role of Individual Variables, Organizational Variables, and Moral Intensity Dimensions in Accountants’ Ethical Decision Making: A Study of Management Accounting in Libya. http://www.ethos.bl.uk Doctoral dissertation. Retrieved from. [ Google Scholar ]
• Musbah A., Cowton C.J., Tyfa D. The role of individual variables, organizational variables and moral intensity dimensions in Libyan management accountants’ ethical decision making. J. Bus. Ethics. 2016; 134 :335–358. [ Google Scholar ]
• Nathan D. How South African societal and circumstantial influences affect the ethical standards of prospective South African Chartered Accountants. Afr. J. Bus. Ethics. 2015; 9 (1):42–62. [ Google Scholar ]
• Oboh C.S. Personal and moral intensity determinants of ethical decision-making: a study of accounting professionals in Nigeria. J. Account. Emerg. Econ. 2019; 9 (1):148–180. [ Google Scholar ]
• Oboh C.S., Ajibolade S.O. Personal characteristics and ethical decision-making process of accounting professionals in Nigeria. Crawford J. Busines. Soc. Sci. 2018; 8 (1):1–23. [ Google Scholar ]
• Oboh C.S., Ajibolade S.O., Otusanya O.J. Ethical decision-making among professional accountants in Nigeria: the influence of ethical ideology, work sector, and types of professional membership. J. Financ. Report. Account. 2020; 18 (2):389–422. [ Google Scholar ]
• Ogunleye O.J. Obafemi Awolowo University; Ile-Ife, Osun: 2015. Accounting Ethics and Financial Practices of Accountants in Nigeria. Doctoral thesis. [ Google Scholar ]
• Otusanya O.J. University of Essex; United Kingdom: 2010. An Investigation of Tax Evasion, Tax Avoidance and Corruption in Nigeria. Doctoral Thesis. [ Google Scholar ]
• Oboh C.S. Individual, Organisational and Situational Determinants of Ethical Decision-Making among Accounting Professionals in Nigeria (Unpublished Doctoral Thesis) University of Lagos, Akoka,; Lagos, Nigeria: 2018. [ Google Scholar ]
• Otusanya O.J., Uadiale M.O. Creative accounting and financial scandals in Nigeria: structures and actors analysis. Int. J. Econ. Account. 2014; 5 (3):191–215. [ Google Scholar ]
• Rawwas M.Y.A., Swaidan Z., Al-Khatib J. Does religion matter? A Comparison study of the ethical beliefs of marketing students of religious and secular universities in Japan. J. Bus. Ethics. 2006; 65 (1):69–86. [ Google Scholar ]
• Rusnell C. The CBC NEWS; 2016. Lawsuit Alleges Alberta Motor Association Victim of $8.2-million Fraud. http://www.cbc.ca/news Retrieved 3/11/2016 from. [ Google Scholar ]
• Rydstrøm H. Like a white piece of paper. Embodiment and the moral upbringing of Vietnamese children. Ethnos. 2001; 66 (3):394–413. [ Google Scholar ]
• Schepers D. Moral development in adolescence: a test of change and influences in context of Sat with German panel data. Contemp. Read. Law Soc. Justice. 2017; 9 (1):70–97. [ Google Scholar ]
• Smith L.M., Smith K.T., Mulig E.V. Application and assessment of an ethics presentation for accounting and business classes. J. Bus. Ethics. 2005; 61 (2):153–164. [ Google Scholar ]
• Thilly F. Conscience. Phil. Rev. 1900; 9 (1):18–29. [ Google Scholar ]
• Tilley E. Ethics and gender at the point of decision-making: an exploration of intervention and kinship. Prism. 2010; 7 (4):1–19. [ Google Scholar ]
• Transparency International Corruption perceptions index. 2016. http://www.transparency.org Retrieved from.
• Trevino L.K., Blown M.E. Managing to be ethical: debunking five business ethics myths. Acad. Manag. Exec. 2004; 18 (2):69–81. [ Google Scholar ]
• Turpen R.A., Witmer P.R. Ethics in the search for accounting employment: student and recruiter perceptions. Account. Horiz. 1997; 11 (2):65–80. [ Google Scholar ]
• Valentine S.R., Rittenburg T.L. The ethical decision making of men and women executives in international business situations. J. Bus. Ethics. 2007; 71 (2):125–134. [ Google Scholar ]
• Valentine S., Godkin L., Page K., Rittenburg T. Gender and ethics: ethical judgments, ethical intentions, and altruism among healthcare professionals. Gender Manag.: Int. J. 2009; 24 (2):112–130. [ Google Scholar ]
• Weber J. Adapting Kohlberg to enhance the assessment of managers' moral reasoning. Bus. Ethics Q. 1991; 1 (3):293–318. [ Google Scholar ]
• Wokukwu K. Creative Accounting: unethical accounting and financial practices designed to boost earnings and to meet financial market expectations. J. Busines. Econom. Pol. 2015; 2 (1):39–48. [ Google Scholar ]

Academia.edu no longer supports Internet Explorer.

To browse Academia.edu and the wider internet faster and more securely, please take a few seconds to  upgrade your browser .

Enter the email address you signed up with and we'll email you a reset link.

• We're Hiring!
• Help Center

Impact of Accounting Ethics on the Practice of Accounting Profession In Nigeria

Related Papers

International Journal of Commerce and Management Research

Augustine Enofe

The broad objective of the study is to examine the impact of ethics on accounting practice in Nigeria. The survey research design was used for the study with an extensive reliance on primary data. The populations of the study consist of accountants, auditors and management of selected companies. A sample of 147 respondents was utilized. The likert scale questionnaire was used as the research instrument and chi-square parametric was utilized as the data analysis method. The findings indicate that firstly, ethics play a significant role in accounting practice. Secondly corporate governance improves ethical compliance of accounting professionals and thirdly, accounting regulatory bodies influences the level of compliance with ethical standards. The recommendation is that there is a need for ethical standards in accounting practice to extend beyond mere documentation and articulation to effective enforcement of these standards and the concerted efforts by all stakeholders ranging from t...

Ogundana Oyebisi

High profile corporate collapses and fraud with which accountants are said to have been associated with has given rise to the questioning of the integrity of the professional accountants. This systemic failure has brought into focus issues of long standing debate with respect to how to curb this act and regain the confidence of the public in the professional accountants and the professional accountancy bodies at large. The study examined the impact of code of ethics on the conduct of professional accountants in Nigeria. Regression Analysis, Correlation Technique and Ttest were employed in analyzing the data collected. The results revealed that the fundamental principles of ethics have a significant impact on the positive conduct of professional accountants. It further revealed that there is no difference in the various opinions of stakeholders with respect to the impact of the code of ethics. It is therefore recommended that early stage teaching of ethics in all schools and continuo...

Adeleke C Adekoya

Abdurafiu Noah

Journal of Finance and Marketing

AYODOTUN IBIDUNNI

Sokoto Journal of Management Studies, 5(2), 68-79

ROSEMARY O B I A G E R I OBASI

IJMSBR Open Access Journal

This study examines accounting professional ethics and accounting information users perspectives within Nigeria context. The primary data was sourced through administration of questionnaire on two major categories of respondents, practicing accountants (both in private and public practice) and the users of financial statement. However, data collected were analyzed using descriptive statistic method. Two hypotheses formulated were tested using chi-square method. The researchers found that public has little or no confidence in the ethical standing of the Accountant. Despite the claims by majority of Chartered Accountants that they always adhere to the ethical principles of the profession, users of accounting information believe otherwise. Besides, moral values have much influence on the ethical reasoning of the Accountant, therefore the higher the personal ethical standard of the Accountant, the easier it is to adhere to the spirit of the professional code of ethics. Also, Codes of ethics have little impact on the ethical reasoning of the Accountant as it only acts as a guide for ethical behavior. Auditors’ independence issues need to be revisited and the relationship between a reporting entity and its professional advisers should be more transparent. It is therefore recommended that, members’ rules for professional conduct should be reviewed more often to deal with the changing culture. The various accounting associations should respectively establish procedures to back-up members who face victimization from their employers for upholding high ethical standards.

This study examined the effect of accounting ethics on the accounting education in selected Nigerian tertiary institutions. The responses from one hundred students in selected three Nigerian tertiary institutions were analyzed using descriptive statistics, simple regression analysis, and multiple regression analysis. The research findings indicate that an accounting ethics have not received the type of attention needed in the curriculum of the accounting departments in Nigerian tertiary institutions. Based on these research findings, the inclusion of ethics as a separate course in the accounting programme and integration of ethics in other courses offered in the accounting departments in Nigerian tertiary institutions were recommended.

NEWTON ABU RASHID SABARMAH

International Journal of Applied Economics, Finance and Accounting

Gabriel Ahinful

RELATED PAPERS

Diana Lucía Gómez-Chacón

John Knottenbelt

Brachytherapy

DANIEL FERNANDEZ

Ferdian widianto

American Journal of Medical Case Reports

azharul hoque

Kartiko Ardi Widodo

Theoretical and Applied Genetics

James Nelson

BMC Geriatrics

Ramesh Poudel

FEBS Letters

Micha Volokita

Gümüşhane Üniversitesi Sağlık Bilimleri Dergisi

Anais do XX Workshop de Informática na Escola (WIE 2014)

Régia Avancini

Saudi Journal of Economics and Finance

CHRISTOPHER EZEKWE

Louis-Patrick Bergot

The Permanente journal

Joseph Gabriel

IEEE International Conference on e-Business Engineering (ICEBE'05)

Bachi Mesablishvili

Physical Review E

Ewa Boryczka

Puspa Astiti

Nusantara Science and Technology Proceedings

Lukman Arif

Diane-Jo Bart-Plange

Frontiers in Psychology

Katalin Grajzel

RELATED TOPICS

•   We're Hiring!
•   Help Center
• Find new research papers in:
• Health Sciences
• Earth Sciences
• Cognitive Science
• Mathematics
• Computer Science
• Academia ©2024

• USF Research
• USF Libraries

Digital Commons @ USF > Muma College of Business > School of Accountancy > Theses and Dissertations

Accounting Theses and Dissertations

Theses/dissertations from 2023 2023.

The Rise of Text Analysis: Using Machine Learning to Explain the Variation in Going Concern Accuracy , Yimei Zhang

Theses/Dissertations from 2017 2017

Applying the Theory of Planned Behavior to Influence Auditors' Knowledge-Sharing Behavior , Xu Cheng

Theses/Dissertations from 2015 2015

Retail Investors' Perceptions of Financial Disclosures on Social Media: An Experimental Investigation Using Twitter , Neal Michael Snow

Does the Format of Internal Control Disclosures Matter? An Experimental Investigation of Nonprofessional Investor Behavior , Amanuel Fekade Tadesse

Theses/Dissertations from 2013 2013

Do Changing Reference Levels affect the Long-Term Effectiveness of Incentive Contracts? , Lee Michael Kersting

Theses/Dissertations from 2010 2010

The Effects of Directional Audit Guidance and Estimation Uncertainty on Auditor Confirmation Bias and Professional Skepticism When Evaluating Fair Value Estimates , Norma R. Montague

Theses/Dissertations from 2009 2009

Mitigating Escalation of Commitment: An Investigation of the Effects of Priming and Decision-Making Setting in Capital Project Continuation Decisions , Ann C. Dzuranin

Understanding and Improving Use-Tax Compliance: A Theory of Planned Behavior Approach , Christopher Robert Jones

Theses/Dissertations from 2008 2008

Detecting Financial Statement Fraud: Three Essays on Fraud Predictors, Multi-Classifier Combination and Fraud Detection Using Data Mining , Johan L. Perols

Performance and Perception: An Experimental Investigation of the Impact of Continuous Reporting and Continuous Assurance on Individual Investors , Anita Reed

The Effect of Multidimensional Information Presentation on the Effectiveness and Efficiency of a Spatial Accounting Judgment , John K. Tan

Advanced Search

• Email Notifications and RSS
• All Collections
• USF Faculty Publications
• Open Access Journals
• Conferences and Events
• Theses and Dissertations
• Textbooks Collection

Useful Links

• Rights Information
• SelectedWorks
• Submit Research

Home | About | Help | My Account | Accessibility Statement | Language and Diversity Statements

Privacy Copyright

• Write my thesis
• Thesis writers
• Buy thesis papers
• Bachelor thesis
• Master's thesis
• Thesis editing services
• Thesis proofreading services
• Buy a thesis online
• Write my dissertation
• Dissertation proposal help
• Pay for dissertation
• Custom dissertation
• Dissertation help online
• Buy dissertation online
• Cheap dissertation
• Dissertation editing services
• Write my research paper
• Buy research paper online
• Pay for research paper
• Research paper help
• Order research paper
• Custom research paper
• Cheap research paper
• Research papers for sale
• Thesis subjects
• How It Works

The List of 70 Accounting Thesis Topics for Students

Accounting describes the process of recording and consolidating financial transactions in business. It involves analyzing, reporting, and summarizing financial transactions to organizations, businesses, tax agencies, and regulators. This is usually presented via a financial statement, a concise summary of all the financial dealings over a stipulated period. It provides clear documented information of a company’s operations, cash flow, and present financial standing. High accounting standards improve the credibility of financial statements. These financial statements can range from cash flow statements, income statements, loss statements, balance sheets, etc. This constant and customary method of financial reporting enables shareholders and other beneficiaries of a business to examine the performance of the said business.

Accounting Thesis For Students

Accounting research topic ideas, topics for accounting thesis, interesting accounting topics for your paper, accounting research questions, accounting dissertation topics, research papers topics on accounting, financial topics to write about.

Accounting is essential for majorly business and management students. They start the basics of the subject in their lower levels, and some progress to further the subject in their higher studies. During this period of education, there will come a time they will require accounting topics for the thesis. They will need to focus on all the elements of the thesis in accounting and compile topics that will suit their interests.

Accounting thesis topics for students are tailored towards a particular aspect of the profession. In this manner, picking an accounting thesis topic and nurturing it will be based on your stage of education, be it an undergraduate, master’s, or PhD level.

Usually, there are areas of improvement and weaknesses in the world of finance. These errors are often the birth of research and analysis to create accounting research paper topics, buying a dissertation , or thesis topics in finance for students.

Trying to focus on many problems at a time can make you not finish your research topic in accounting at the appointed time. As a student, this is one error you want to avoid.

Naturally, you cannot master all the accounting subjects with the same ease. Hence, focus on the ones your strength resides in and discard the ones that posed a certain level of difficulty during the study. This is an important tip and recommendation when picking accounting topics for research. Here are some good examples of accounting research topics ideas.

• Accounting origin
• The Ethics of Accounting and Its Relevance in The Society
• Company structure influence on Accounting
• Information Systems For Accounting
• Accounting and Taxes
• Accounting as Relates to Personal Finance
• Profit Management
• Financial Markets and Accounting
• Accounting Methods Applied Throughout History
• The Age of Virtual Accountants

Accounting thesis topics for accounting students can be chosen according to the interests, and strengths each student shows in a certain period of their education. This can involve multiple accounting research paper topics, with the student now being left to choose the one they master more appropriately.

Usually, companies have weaknesses in different areas, it is a case of whether they are notable. When trying to pick accounting research topics as an undergraduate, you should focus on a singular problem and view it from various angles of prescriptive solutions.

• Inventories of Merchandise
• System Control and Inventory Management
• Manual of Different Accounting Principles
• International Financial Reporting Standards of Negligible Assets
• Procedures for Adopting Financial Reporting Standards
• Tax Culture as a Method of Keeping Companies in Check
• Accounting Guidelines of a Business
• Management Accounting Research
• Automation of Accounting Processes and Its Effects on Businesses
• Data Technology in Accounting Functions

These accounting topics come in forms that pique the interest of accountants and everyday business people. It should be bold, descriptive, and tally with a trending and important issue in all areas that concern the accounting sector. Getting topics like these are not as easy as you would imagine. It usually takes broad-spectrum research and paying rapt attention to business accounting flaws or potential problems.

• Modern Techniques of Debt Management
• Latest Technologies in Digital Accounting
• Fundamental Forensic Accountancy Skills
• Importance of Fast Information Integration for Modern Accounting
• Analysis and Design Risk in Accounting Systems
• Accounting Management and Financial Markets
• Issues in Implementation of Theoretical Accounting Processes in Applied Accounting
• Strategies to Make Organizational Finances Transparent
• Offshore Accounting Processes
• Significance of Financial Markets in Different Economies

When looking for accounting research topics ideas, determining the reason behind the question is the most challenging and vital decision in writing topics for accounting research papers. This difficulty arises because the foundation of your entire accounting topic depends on that one question.

Getting it wrong or mixing up the wrong statements can greatly impair the direction of your accounting topic for a research paper. Some good accounting research questions include:

• How to Investigate Forensic Accountancy?
• How to Avoid Debt Growth in Businesses?
• The Process of Making Accurate and Informed Accounting Decisions?
• How Does Culture Influence the Accounting System?
• Steps to Follow to Become a Certified and Chartered Accountant?
• How to Discover Effective Accounting Systems for Accountants?
• When Do You Need to Hire Personal Accountants?
• What are the limitations of digital Technology Evolution for the Accounting Niche?
• What Factors Facilitated the 2008 Worldwide Financial Crisis?
• What are the Processes Involved in Tax Assessment in Organizations?

In choosing an accounting topic for a project, you need to pick a topic that interests you, writing becomes easy and fast when you do. You can seek out simple accounting research topics if that’s what you can handle, or you could go for current accounting topics and interesting topics in finance.

However you choose to make that decision is up to you, but whatever topics you eventually come up with must not be vague or narrowly written. There should be a balance. Finally, you should extensively research and review your dissertation topic before making your topic decision. Having all these in mind, let’s look at some project topics on accounting.

• Quality in Quantitative Management Accounting Research
• Management Accounting and Supply Chain Strategy
• Notable Trends in Business Research and Accounting Finance and Management Control
• Effect of Auditing On Financial Reporting
• Importance of Fraud Detection in a Digital Environment
• The Globalization of Auditing Standards- an investigative analysis
• Studying the Effects of Intellectual Capital on the Development of Large Industries
• Tax Legislation in Freelance Businesses
• Critical Analysis of the Effects of Small Business Budgeting on Tertiary Institutions

Research papers on accounting involve a great deal of interest in the subject matter being researched. The aim is to enlighten and provide analytical detail to the readers. Also, in choosing a research paper topic, you should aim to acquire your readers’ attention.

This can be achieved by having sound knowledge of the research topic and gathering relevant information to explain the research better. Here are some good examples of accounting topic research papers.

• A Review on Government Management Accounting: Research in 2022
• Business Correspondence Analysis: Its Application in Management Accounting Research
• The Conceptual Framework of Strategic Management Accounting
• Meaning of Accounting Theories for Business
• What Impact Does Accounting Information Systems Have on Business Performance?
• Best Accounting Practices for Online Businesses
• Problems with the Normative Theory of Accounting
• Implementation of the International Public Sector Accounting Standards Board in the University System
• The Relationship between Public Sector Expenditure Accounting and Infrastructural Development
• Application of Accounting Standards in Critical Business Processes of Financial Conglomerates.

In the world of finance, various improvements are to be made with various issues that need solving. Highlighting the need for change and evolution brings about the intention of addressing these issues.

With the inception of digital currencies, new online databases for recording and carrying out financial transactions, there is a wealth of financial discussions to be had. With this fact also comes greater financial issues that need attention. Some eye-opening financial topics you can write about to address some financial systems include:

• Need for Accounting Technology
• Issues of Financial Ethics
• How to Develop and Improve Financial Systems
• Perspectives on Earnings Management
• Effective Methods of Tax Reduction for Organizations
• Role of Financial Markets in Accounting Management
• Methods of Preventing Financial Fraud
• What you should know about the Goldman Sachs Securities Fraud Case
• Commodities in Financial Markets
• Effect of External Factors on Cash Flow

Wrapping up

Accounting thesis topics for students are nearly limitless. Not only with the issues that need solving or understanding, but the different facets of accounting that the world currently operates on that’s why many students are looking for help who will write my thesis , we have good news for such students because we have been doing this for a long time. This gives room for continuous enlightening and improvement due to the various areas accounting comes in contact with. There is the realm of management accounting, auditing, tax accounting, bookkeeping, online accounting, and many more. With the different list of accounting topics and thesis topics suggested, you can pick out any of them and chart your course to become a great accountant in the future.

Leave a Reply Cancel reply

Tyco International’s Unethical Accounting Practice Case Study

Unethical accounting practice, affected stakeholders, fundamental accounting ethics principles, recommendations, reference list.

One of the key unethical accounting practices used by Tyco International is the distribution and reporting of incorrect bonuses and compensation for the company’s leaders. Thus, in the early 2000s, Tyco leaders, including CEO Dennis Kozlowski, were charged with fraud, including tax evasion and receiving unauthorized or illegal bonuses (Fraedrich and Ferrell, 2021). Additionally, the company used special investment accounts to transfer money between subsidiaries to cover its operating expenses. This practice allowed them to hedge against obvious losses and profits.

The two key stakeholders impacted by Tyco’s unethical practices are the company’s shareholders and employees. Thus, shareholders suffered from a drop in share price and a loss of trust in the company, while employees may have faced unfavorable working conditions and a loss of motivation due to the unlawful enrichment of the leadership (Brooks and Dunn, 2020). Investors may be significantly dissatisfied with unethical practices as they can lead to the loss of profits.

Among the five key accounting ethics principles, Tyco International violated integrity, professional competence, and objectivity. Thus, Tyco leaders deceived shareholders by hiding the actual amounts of their compensation and awarding illegal bonuses (Taylor and Williams, 2020). Furthermore, they did not comply with laws and regulations related to accounting and taxation, which is indicative of incompetence (Jennings, 2021). Finally, leaders allowed decisions to be made based on personal interests, which contradicts the principle of objectivity.

To prevent such situations for other companies, it is important to recommend strengthening corporate governance and focusing on transparency and disclosure of information. By implementing strict procedures and controls at all levels of leadership, including independent board members who are able to oppose unethical practices, leaders can ensure ethical behaviors at all levels (Sturm, Clevenger and MacGregor, 2021). Furthermore, by guaranteeing full and timely disclosure of financial information, including executive compensation, it is possible to ensure transparency and trust from shareholders and employees.

Brooks, L. J. and Dunn, P. (2020) Business and Professional Ethics . New York, NY: Cengage Learning.

Fraedrich, J. and Ferrell, O. C. (2021) Business Ethics: Ethical Decision Making and Cases . New York, NY: Cengage Learning.

Jennings, M. M. (2021) Business: Its Legal, Ethical, and Global Environment . New York, NY: Cengage Learning.

Sturm, P., Clevenger, M. R. and MacGregor, C. J. (2021) Partnership Motives and Ethics in Corporate Investment in Higher Education . New York, NY: IGI Global.

Taylor, E. Z. and Williams, P. (eds.) (2020) The Routledge Handbook of Accounting Ethics . New York, NY: Taylor & Francis.

• Tyco International Ltd: Business Failure Review
• Tyco Corporation's Organization Management
• Business Corporations and their Role in the Industry
• Company Loyalty and Business Ethics
• Aronsons’ Breach of Trust and Insider Trading
• Uber: Ethical and Moral Challenges
• Dominion Energy Company's Coal Ash Ethical Dilemma
• The American Telephone and Telegraph: Unethical Behavior
• Chicago (A-D)
• Chicago (N-B)

IvyPanda. (2024, May 23). Tyco International's Unethical Accounting Practice. https://ivypanda.com/essays/tyco-internationals-unethical-accounting-practice/

"Tyco International's Unethical Accounting Practice." IvyPanda , 23 May 2024, ivypanda.com/essays/tyco-internationals-unethical-accounting-practice/.

IvyPanda . (2024) 'Tyco International's Unethical Accounting Practice'. 23 May.

IvyPanda . 2024. "Tyco International's Unethical Accounting Practice." May 23, 2024. https://ivypanda.com/essays/tyco-internationals-unethical-accounting-practice/.

1. IvyPanda . "Tyco International's Unethical Accounting Practice." May 23, 2024. https://ivypanda.com/essays/tyco-internationals-unethical-accounting-practice/.

Bibliography

IvyPanda . "Tyco International's Unethical Accounting Practice." May 23, 2024. https://ivypanda.com/essays/tyco-internationals-unethical-accounting-practice/.

• Share full article

Advertisement

Supported by

How Donald Trump’s Financial Future Became Tied to Trump Media

Mr. Trump has treated Trump Media, which runs his social network Truth Social, as a low-cost sideshow. Now a big portion of his wealth hinges on its success.

By Matthew Goldstein and David Yaffe-Bellany

Matthew Goldstein reported from New York, and David Yaffe-Bellany from San Francisco.

At Mar-a-Lago on a Wednesday evening last month, Donald J. Trump mingled with partygoers, greeting his supporters and making small talk. The country star Lee Greenwood sang “God Bless the U.S.A.,” and the former president’s oldest son, Donald Jr., gave a speech.

The elder Mr. Trump was presiding over a cocktail reception for about 150 guests to celebrate the public debut of Trump Media & Technology Group , the parent company of his social media app, Truth Social. Trump Media’s share price had soared in its first day of trading, adding billions of dollars to Mr. Trump’s wealth.

But the party was far from lavish. Guests munched on cookies emblazoned with the letters DJT, the company’s stock symbol. They were invited via the free Paperless Post app and told they couldn’t bring a plus one, according to a copy of the invitation.

Mr. Trump was not shy about the frugality. A benefit of Truth Social, he told guests, is that it is “not very expensive to run.”

From the moment Trump Media was founded in 2021, Mr. Trump has treated it as a low-cost, low-effort venture. While he once served as chief executive and owns nearly 65 percent of the company, he has been only marginally involved in its day-to-day operations, mostly posting on Truth Social and delegating the business to others. At times, he considered working on competing ventures, according to court filings, corporate records, and five former employees and others familiar with the company.

Mr. Trump now finds himself in a strange position, with his financial future hinging on an endeavor that he sometimes seemed indifferent toward. Trump Media’s Wall Street debut in March turned Mr. Trump’s stake into a more than $5 billion bonanza. It has tripled his net worth , providing a potential monetary lifeline as he runs for president and grapples with steep legal bills tied to the civil and criminal cases against him.

Yet his newfound fortune is precarious. For years, Trump Media, founded by two former contestants of “The Apprentice,” was entangled in a Securities and Exchange Commission inquiry and an insider-trading investigation . It has no products beyond Truth Social, which has a small audience and generated $770,000 in revenue in the first three months of the year while losing $328 million. Still, it has a market valuation greater than $7 billion.

“It’s one of the most obvious worthless stocks I have ever seen,’’ said Alan Jagolinzer, an accounting professor at the University of Cambridge in England.

Mr. Trump’s prosperity is merely paper wealth. Trump Media’s share price is volatile, fueled by amateur traders who often ignore business fundamentals. And Mr. Trump cannot sell his shares until September, under a provision common in merger agreements and public offerings, which restricts him and other large investors from immediately cashing in on shares. If he sells the stock, smaller shareholders may take it as a signal to flee.

“The risk of the Trump Media fortune is very, very high,” said Mike Stegemoller, a finance professor at Baylor University. “You’re now dealing with a fortune that is somewhat disconnected from reality.”

Representatives for Mr. Trump didn’t respond to requests for comment. Shannon Devine, a Trump Media spokeswoman, said The New York Times’s reporting on the company was “filled with misleading insinuations and outright falsehoods, and supported by supposed experts who just happen to share the authors’ biases.”

Committed, or not?

Trump Media was not Mr. Trump’s idea.

After Mr. Trump left the White House in 2021, two contestants from the second season of his reality TV show “The Apprentice” — Wes Moss and Andy Litinsky — pitched him an idea for a social media platform built around his brand.

Mr. Trump had just been barred from Twitter after the Jan. 6 riot at the Capitol. Mr. Moss and Mr. Litinsky argued that if the former president built his own social media company, he wouldn’t be deplatformed again.

In February 2021, Mr. Trump signed a deal with the two men to start Trump Media. He received a 90 percent stake in the venture and the title of chief executive. All he had to do was give it his name.

Mr. Moss and Mr. Litinsky oversaw the hiring of engineers to build Truth Social, which would largely cater to conservatives, with the aim of releasing the app in about a year.

But before the app was even built, Mr. Moss and Mr. Litinsky wanted to take Trump Media public through a merger with a “special purpose acquisition company.” SPACs are shell corporations that raise funds by offering shares on Wall Street, then look for private companies to combine with, allowing those companies to bypass the scrutiny that typically comes with an initial public offering.

Mr. Trump left the details to the “Apprentice” pair. Mr. Litinsky, a right-wing radio personality, cold-called hundreds of SPACs to strike a deal. It was “almost no different than picking up the phone to sell insurance,” he testified in federal court last month, in a legal case tied to the merger process.

He eventually found Patrick Orlando, an ex-Deutsche Bank trader who was working on setting up a SPAC called Digital World Acquisition Corporation.

Mr. Moss and Mr. Litinsky brought Mr. Trump in for meetings to sign off on a merger. In February 2021, Mr. Orlando arrived at Mar-a-Lago to speak with the former president. Mr. Trump had been playing golf with Jack Nicklaus, the golfing champion, company records show.

At another meeting, Mr. Trump led a group on a brief tour at Mar-a-Lago, recounting a zoning fight he had with local officials in Florida, according to a video reviewed by The Times.

Mr. Trump, who occasionally met Trump Media’s investors, leaned heavily on Donald Jr. to represent his interests, according to company records and two people familiar with the talks.

But in the end, the elder Mr. Trump was the “ultimate decision maker” on the SPAC deal, Mr. Litinsky testified.

Yet as negotiations unfolded, Mr. Trump considered abandoning Trump Media, according to a daily log of the company’s activities maintained by a former executive. He held talks with a rival start-up called Gettr, a conservative social media platform led by a former campaign adviser, Jason Miller.

In September 2021, Mr. Litinsky and Mr. Moss persuaded Mr. Trump to sign a licensing deal committing him to Trump Media. Under the terms, Mr. Trump would have to post messages on Truth Social before publishing them on any other platform. Mr. Trump didn’t get additional money from the contract, but it included provisions allowing him to abandon his commitments if the merger took too long to close.

Some Digital World board members were uneasy about the merger with Trump Media. On a call in October 2021, a board member, Lee Jacobson, complained that Trump Media was taking a “cowboy approach,” with financial projections that did not add up, according to a recording filed in court.

Mr. Orlando quelled the dissent, insisting that the deal was a “once-in-a-lifetime opportunity.”

A legal cloud

On the morning of Oct. 20, 2021, the merger paperwork between Trump Media and Digital World was ready for a signing ceremony at Mar-a-Lago. Then Mr. Trump got a call.

On the other end was Mr. Miller, who ran Gettr. Mr. Miller again wanted Mr. Trump to join his app, Mr. Litinsky testified in April. Mr. Trump seemed undecided about what to do and summoned Mr. Litinsky to his Mar-a-Lago office, asking him to pitch the rationale for the merger with Digital World. Mr. Litinsky said he was worried the former president would abandon the deal .

Mr. Trump ultimately did not join Gettr. Later that day, he and Mr. Orlando signed the merger agreement during a meeting at Mar-a-Lago..

Trump Media’s next step was to release Truth Social, which officially debuted on Feb. 21, 2022. “Because the president wanted a Ferrari, they built him a Ferrari,” Lori Heyer-Bednar, Trump Media’s chief legal officer, said at the time. But the site was initially plagued with glitches, prompting complaints.

Mr. Trump’s account quickly published its first post, vowing that he would be an active user. Mr. Trump did not write the message or post it; an executive at Trump Media did, according to a video reviewed by The Times.

Legal hurdles soon arose that delayed the regulatory approval for the merger. In late 2021, the S.E.C. opened an investigation into the merger, while prosecutors prepared separate insider-trading charges against a group of early Digital World investors . (No one from Trump Media was charged with wrongdoing.) Trump Media’s public debut couldn’t move forward until those legal issues were resolved.

With the deal hanging in the balance, Mr. Trump moved to strengthen his hold over Trump Media. In late 2021 and early 2022, he asked Mr. Litinsky to give company shares to his wife, Melania, according to court records and a person with knowledge of the matter.

Mr. Litinsky refused. In the spring of 2022, Mr. Trump had him ousted, according to a lawsuit that Mr. Litinsky and Mr. Moss later filed against Trump Media. Mr. Moss left a few months later. They were replaced by Devin Nunes, a former Republican congressman, who became Trump Media’s chief executive. Mr. Trump’s title changed to chairman, and his son Donald Jr. joined the board.

By then, Mr. Trump had become more active on Truth Social, where he now has seven million followers. He posted frequently about prosecutors and political opponents, insisting that the 2020 presidential election was stolen from him.

But Trump Media was struggling to stay afloat. In regulatory filings, the company warned that it might go out of business if the merger wasn’t approved soon.

Last July, Digital World agreed to pay $18 million to the S.E.C. to settle charges that it had misled investors about the deal with Trump Media. The settlement lifted a legal cloud. Mr. Trump received a new class of shares that gave him majority voting power over the company, and Trump Media recommitted to the merger.

On Feb. 14, the S.E.C. approved the merger agreement. The company’s path to the stock market was back on.

‘People can’t stop us’

At the Mar-a-Lago cocktail party last month, Mr. Trump thanked some early Trump Media investors and exchanged pleasantries with the actor Jon Voight, a longtime supporter. Addressing the crowd, which included several conservative influencers, Mr. Trump declared that his app would be bigger than Twitter, now known as X.

“All I know is I get my voice out and people can’t stop us,” he said.

Whatever reservations Mr. Trump had about Trump Media appeared to have melted away. On March 23, a day after Digital World shareholders approved the merger, Mr. Trump posted a short message on his app: “I love Truth Social.”

When the company started trading publicly on March 26, it surged 32 percent over its first two days, closing at around $66.

After an infusion of new shares from the merger, Mr. Trump’s 90 percent stake in Trump Media dropped to around 65 percent. But he remains the single biggest shareholder with about 115 million shares — including 36 million that he received last month as a kind of bonus for the stock trading so well.

Mr. Trump also stepped back from being an officer or director of the company. He didn’t explain why, but Trump Media’s code of ethics says employees and directors engaging in “political activities are expected to do so as private citizens.”

The company’s future is not assured. While it has outperformed other right-wing apps , Truth Social had just one million unique visitors in April, a small fraction of X’s traffic, according to Similarweb, an internet tracker. Its revenue comes solely from ads, including ones for patriot-themed apparel and Trump paraphernalia. The company’s $328 million loss in the first quarter, which it reported on Monday , was affected by merger-related costs.

In September, Mr. Trump can start selling Trump Media’s shares or use them as collateral for loans. If he sells on the open market, investors could take it as a negative sign and dump their stock, hurting the share price. To avoid that, Mr. Trump could try to negotiate a private sale, cashing in on some of his shares without causing a market panic.

“There would have to be a big discount,” Mr. Jagolinzer, the accounting professor, said. “The red flags are just so glaring.”

Kitty Bennett contributed research.

Matthew Goldstein covers Wall Street and white-collar crime and housing issues. More about Matthew Goldstein

David Yaffe-Bellany writes about the crypto industry from San Francisco. He can be reached at [email protected]. More about David Yaffe-Bellany