Transcript Organizational Leadership and Ethical Climate in Utah’s

Organizational Leadership
and Ethical Climate in Utah’s
Certified Public Accounting Profession
(90-minute Presentation Slides)
by
Jeffrey N. Barnes, CPA, MAcc
Oral Defense Slides in Partial Fulfillment
of Requirements for the Degree
Doctor of Business Administration
UNIVERSITY OF PHOENIX
February 2013
Chapter 1, Introduction
• CPAs are critically involved with assuring fair presentation of
financial statements.
• Fraudulent financial reporting continues (Arens, Elder, & Beasley, 2012; Apostolou
& Crumbley, 2007).
• Foundations of fraudulent behavior are rooted in sociological,
psychological, and moral-development theories (Albrecht, Romney,
Cherrington & Roe, 1982).
Chapter 1, Introduction
Sociological Theories
• Differential association, with focal leader, contributes to
informing and perpetuating unethical behavior (Galliher & Guess, 2009).
• CPA profession organizational structure lends to fragmented
and departmentalized workplace environments (Darley, 2004).
• Ethical climates are “. . . the perceived prescriptions,
proscriptions, and permissions regarding moral obligations
in the organization” (Victor & Cullen, 1988, p. 101).
Chapter 1, Introduction
Purpose of the Study
• Quantitative research study with correlation design to
describe and quantify relationships between
–
–
–
–
focal supervisor’s leadership style,
subordinate’s ethical climate perceptions,
religiosity influence, and
regulations’ influence.
Chapter 1, Introduction
Significance of the Problem
• Accounting profession to benefit from the study by,
– understanding current state of organizational leadership,
– finding confirmatory or disconfirmatory evidence that leadership
correlates to ethical perceptions,
– determining if religiosity and regulatory influence relate to leadership
and ethical climate perceptions, and
– designing leadership training interventions.
Chapter 1, Introduction
Significance of the Problem
• A growing body of literature, although small in scope,
provides some information about public accounting firms’
leadership, ethical climate, and firm personnel’s cognition of
its importance (Bobek, Hageman, & Radtke, 2010; Gunz, Gunz, & McCutcheon, 2002; Jiambalvo & Pratt,
1982).
Chapter 1, Introduction
Overview of the Research Design
• This quantitative research study, with a correlation design,
investigated the relationships between independent,
dependent, and moderating (intervening) variables (Creswell, 2005).
• The model variables are,
–
–
–
–
leadership style (IV),
ethical climate perception (DV),
religiosity (MV, treated as an IV), and
understanding of FSGO (MV, treated as an IV).
Chapter 1, Introduction
Overview of the Research Design
• The research sought to explore answers to the following
questions:
1. To what degree do partners, managers, and supervisors’ various leadership
styles relate to the subordinate’s perception of what are ethical
expectations and behaviors to be followed?
2. To what degree does the subordinate’s knowledge of regulatory
influence relate to the subordinate’s perception of the ethical climate
and the focal leader’s leadership?
3. To what degree does the subordinate’s religiosity or compassionate
service relate to the subordinate’s perception of the ethical climate and
the focal leader’s leadership?
Chapter 1, Introduction
Overview of the Research Design
• H10: A leaders’ transformational leadership style does not
relate to the subordinate’s perception of the firm’s ethical
climate in Utah.
• H20: A leaders’ transactional leadership style does not relate
to the subordinate’s perception of the firm’s ethical climate in
Utah.
• H30: A leaders’ laissez-faire leadership style does not relate to
the subordinate’s perception of the firm’s ethical climate in
Utah.
Chapter 1, Introduction
Overview of the Research Design
• H40: Known exogenous regulatory/punishment factors, as
perceived by subordinates, do not relate to the subordinate’s
perception of the firm’s ethical climate and immediate
leadership in Utah.
• H50: The degree of service or church attendance does not
relate to the subordinates’ perception of the firm’s ethical
climate and immediate leadership in Utah.
• Alternate hypotheses, for each of the null hypotheses,
suggest that relationships exist
Chapter 1, Introduction
Overview of the Research Design
Chapter 1, Introduction
Summary
• Established that fraudulent financial reporting continues
• Suggested a background for the problem rooted in sociology,
psychology, ethics, moral development; and perhaps
influence by professionals’ regulations and religiosity
• Stated the significance of the problem to the public and the
accounting profession
• Proposed a quantitative research project, with correlation
design
Chapter 2, Review of Literature
Introduction
• The current study,
– explains previous research related to leadership and ethical climate,
which is sparse in the accounting profession,
– provids secondary evidence regarding regulatory controlling
subordinate effect, and
– provides secondary evidence regarding the nascent emerging
positive subordinate effects of religiosity.
Chapter 2, Review of Literature
Documentation
Category of Documentation
Number
Percentage
2006 to present
123
44.2%
Prior 2006
154
55.8%
All references
277
100.0%
Founding or extending theorists
41
14.8%
Empirical research
83
30.0%
Peer-reviewed articles
198
71.5%
Books
57
20.6%
Dissertations/unpublished research
4
1.4%
Official websites
18
6.5%
Chapter 2, Review of Literature
Moral Philosophies and Ethics Theories
• A review of moral philosophy, as founded in ethics theories,
is useful for identifying the common struggles ethics systems
seek to resolve. Moral philosophy can be categorized in a
number of frameworks, this study categorizes as,
– Maximizing self-interests,
– Maximizing joint-interests, and
– Standing on moral principles.
• Related to accounting, criticisms exist for each of these moral
philosophical frameworks
Chapter 2, Review of Literature
Ethics and Effective Leadership
• Underpinning leadership style is the individual’s ethical
philosophy, whether that generally be leaning toward
egoism, benevolence, or universal principles.
Chapter 2, Review of Literature
Ethics and Effective Leadership
• Leadership style had a correlation to moral
development stages. Their research showed that
managers in the highest stage of moral reasoning
exhibited more transformational leadership traits and
behaviors (Turner, Barling, Epitropaki, Butcher, and Milner (2002).
• Similar results with the Norwegian Naval Cadets in which
postconventional moral reasoning was positively
correlated with transactional and transformational
leadership (Olsen, Eid, and Johnsen (2006).
Chapter 2, Review of Literature
Leadership
• Leadership is about influencing individuals and groups within
an organization (Nahavandi, 2006).
• Leadership has many definitions; however, all leadership
definitions have the common thread of influencing others to
accomplish organizational objectives. Important is the
responsibility that leadership has to set the ethical tone
about how to accomplish organizational objectives.
• Leaders are responsible for creating an ethical work climate
(Schminke, Arnaud, & Kuenzi, 2007).
• Some evidence has shown that top management’s ethical
climate standards and perceptions do not necessarily filter
down to lower-level employees (Trevino, Weaver, & Brown, 2008).
Chapter 2, Review of Literature
Full-range Leadership Theory
• The full-range leadership theory (FRLT) has been a relied
upon as a valid continuum describing the range of leadership
styles exhibited by effective organizational leaders (Lowe, Kroeck, &
Sivasubramaniam, 1996).
• Regarding the FRLT model, with its nine leadership
descriptions (subscales), were stable and that leadership
effectiveness lessened the further away the leadership style
ventured from the transformational description down
through transactional and to the laissez-faire leadership styles
(Lowe, Kroeck, & Sivasubramaniam, 1996).
Chapter 2, Review of Literature
Leadership and Subordinate Socialization
• The fundamental leadership relational association
hypothesizes to affect an organizational ethical and moral
climate (Neubert et al., 2009).
• The most important ethical figures in an organization are the
leaders and the values they possess, both by word and by
deed.
• Interpersonal leader-to-subordinate relationships influence
ethical behavior and perceptions (Mumford, Waples, Antes, Murphy, Connelly, Brown, &
Davenport (2009).
Chapter 2, Review of Literature
Leadership and Its Linkage to Ethical Climate
• Supervisors “. . . influence employees’ perceptions of the
policies and practices, i.e., ethical climate” (Wimbush & Shepard, 1994, p. 645).
• Postulated that their results (i.e., correlation study findings)
“show that managers’ attitudes, shaped by the tone set by
top executives, significantly influence managers’ decisions to
behave unethically or not” (Carpenter & Reimer, 2005, p. 125).
• Finding correlative relationships between Bass and Avolio’s
full-range leadership theory styles and ethical climate
perception would be useful knowledge in the accounting
profession.
Chapter 2, Review of Literature
Ethical Climate Theory to Leadership
• The AICPA’s Statement on Quality Control Standards (SQCS)
No. 7, A Firm’s System of Quality Control, requires . . . policies
and procedures to ensure that services are competently
delivered and adequately supervised with independence,
integrity, objectivity, and concern for the public trust (AICPA, 2011a).
• The ethical principles of independence, integrity, objectivity,
and concern for the public trust are intellectual virtues.
These virtues should be foundational in the ethical decision
making for members of the AICPA.
Chapter 2, Review of Literature
Ethical Climate Theory to Leadership
• Brown, Trevino, and Harrison (2005) found that “. . . ethical
leadership predicts outcomes such as perceived effectiveness
of leaders, employees’ satisfaction with the job, and their
willingness to extra effort into the work and to report
problems to management” (as cited in Toor and Ofori, 2009, p. 536).
• Victor and Cullen (1988) developed a theoretical framework
for assessing the ethical context within which employees
operate.
Chapter 2, Review of Literature
Ethical Climate Theory
Nine Theoretical Ethical Climate Types
Locus of Analysis
Egoism
Ethical
Criterion
Benevolence
Individual
Local
Cosmopolitan
Self-interest
Company profit
Efficiency
(EI)
(EL)
(EC)
Friendship
Team Interest
Social responsibility
(BI)
(BL)
(BC)
Personal morality
Company rules and
Laws and
procedures
professional codes
(PL)
(PC)
Principle
(PI)
Source: Victor and Cullen (1988, p. 104).
Chapter 2, Review of Literature
Ethical Climate Theory
• Victor and Cullen’s (1988) five empirically derived ethical
climate types have remained rather stable over time and
addressed in some limited accounting peer-reviewed journal
articles (Martin & Cullen, 2006).
Chapter 2, Review of Literature
Ethical Climate Theory
Five Statistically Derived Ethical Climate Types
Instrumental
Caring
Independence
Rules
Lawcode
Locus of Analysis
Egoism
Individual
Local
Cosmopolitan
Self-interest
(EI)
Company profit
(EL)
Efficiency
(EC)
Friendship
(BI)
Team Interest
(BL)
Social responsibility
(BC)
Personal morality
Company rules and
procedures
(PL)
Laws and
professional codes
(PC)
Ethical
Criterion
Benevolence
Principle
(PI)
Chapter 2, Review of Literature
Public Accounting Ethical Climate Summary
• The several ethical climate research studies for public
accounting indicate the importance of ethical climate
perceptions on subordinate decision making (Buchan, 2005).
• In this Asian study, the public accountants’ ethical climate
perceptions of “. . . rules codes, caring, self-interest, social
responsibility, and instrumentalism, while efficiency and
personal morality were perceived higher in the private sector”
(Venezia, Venezia, & Hung, 2010, p. 77).
Chapter 2, Review of Literature
External Control Factors—FSGO Regulations
• Some important regulatory control efforts to curb corruption
and fraud in U.S. business have been the establishment of the
Federal Sentencing Guidelines for Organizations (FSGO) and
related subsequent amendments as well as the SarbanesOxley Act of 2002 regulations.
• Commission determined, through input from their newly
organized Advisory Board, to “. . . encourage organizations to
foster ethical requirements as opposed to mere technical
compliance that can potentially circumvent the intent or spirit
of law or regulation” (FSGO, 2010. p. 738).
Chapter 2, Review of Literature
Religiosity
• Religion is thought to influence business individuals’ ethical
decision making and ethical climate perception within organizations
(Weaver & Agle, 2002).
• Recently, religiosity, spirituality and ethics are emerging, in
management literature, as possibly related factors for positive
effectiveness (Corner, 2009).
• Communities with religious institutions, in which a higher
discourse of spiritual values is taught and ritually and personally
practiced, nurture spirituality. Spirituality, in a form of religious and
community service orientation, enhance ethical behavior intention
(Christensen et al., 2005).
Chapter 2, Review of Literature
Summary
• An organization’s ethical climate, is founded on the collective
foundation of it individuals moral and ethics philosophies.
These moral and ethical philosophies are related to the five
empirically derived ethical climate types found within
organizations.
• Organizational leadership shapes and is shaped by the
organization’s ethical climate. Potentially affecting the public
accountants’ perceptions of organizational leadership and
ethical climate are two potential moderating variables, which
are awareness of regulatory statutes and personal religiosity,
respectively.
Chapter 2, Review of Literature
Summary
(cont.)
• Both the lack of empirical research into the public accounting
profession and the possible insights correlative influence
these two moderating variables could provide and
substantiate the additional needed empirical studies
regarding the current state of accounting firms’ ethical
climate structure and the prevailing leadership style typically
exhibited.
Chapter 3: Method
Theoretical Model Design
Known Exogenous
Regulatory/Punishment
Factors
(MV: H4)
1 FSGO Scale
(FSGO Survey,
12 Questions)
H4
H4
Superiors'
Leadership Style
(IV: H1, H2, H3)
9 Leadership Scales
H1, H2, H3
Subordinates'
Perception of
5 Ethical Climate Scales
(DV)
(ECQ Survey,
26 Questions)
(MLQ Survey,
45 Questions)
H5
H5
Extent of
Religiosity/Compassionate
Service
(MV: H5)
1 Scale
Legend:
DV
IV
MV
H
(REL Survey,
4 Questions)
Dependent Variable
Independent Variable
Moderating (Intervening) Variable
Hypothesis
Figure 2. Statistical Integrated Leadership & Ethical Climate Framework
Chapter 3: Method
Justification for Quantitative Method
• First, a researched body of knowledge already exists regarding the
major concepts of leadership styles and their effect on subordinate
employees’ perceptions of organizational ethical climate (Dahlin, 2009).
• Second, this quantitative research with correlation design also
sought understanding of whether a social or psychological
phenomenon possesses confirmatory reality (Campbell & Stanley, 1963).
• Third, the quantitative research questions found answers to what
degree a variety of variables correlatively impact the subordinate’s
perception of the organizational ethical climate and leadership
style.
Chapter 3: Method
Population
• In 2010, approximately 1,175 certified public accountants
(CPAs), in the practice of public accounting, in the State of
Utah and members of the Utah Association of Certified Public
Accountants (UACPA, 2009).
• There were 469 separate physical CPA firm offices in Utah at
the time of the study, many with below five CPAs. Of the 469
firms, only 41 firms with five or more CPAs exist (UACPA, 2009).
• 11 CPA firms provided written permission to contact
organization personnel, via email, for the administration of
the electronic survey of this research study.
Chapter 3: Method
Population
(Cont.)
Administrative
Partner,
CPA
Tax
Services
Supervisor,
CPA
Assurance
Services
Supervisor,
CPA
Tax
Services
Subordinate,
CPA
Assurance
Services
Subordiante,
CPA
Figure 3. Minimum Practice Structure Sought from Population.
Chapter 3: Method
Sample
Cochran’s
Sample Size Formula
• n = (t)2 * (s)2
(d)2
Minimum Desired Sample Size
• Calculation of desired
sample size is, n = [((1.96)2 *
(1.25)2)/(.25)2] = 96.04 or
rounding up, 97
respondents
Chapter 3: Method
Data Collection
(Cont.)
• The original request was sent on February 7, 2012, the
second request was sent on February 18, 2012, and the third
and last request was sent March 13, 2012.
• The 257 email addresses, at the time the survey was
administered, there was provided 236 continuing valid
prospective respondents. The reduction of 21 emails
represented natural attrition from the firms. The number of
survey participants was 103 from a target population of 236,
providing a 43.6% response rate.
Chapter 3: Method
Pilot Study
Table 9
Summary of Changes to the Survey based on Pilot Sample Recommendations
Pilot Sample Recommendation
Corrective Change to Survey
“Please provide an orientation statement before Before each of the four surveys, an orientation
each survey.”
statement was made to help focus the survey
responder to the immediate survey’s intent and
context.
“I was able to proceed to the next page without
having answered all the questions on the
survey webpage.”
The survey instrument was changed to
disallow progressing to a next survey webpage
without all the questions being answered. If the
survey respondent neglected to answer a
question, that questions was turned into red
text to highlight the error. The question then
needed to be completed in order to proceed
forward with the survey.
“In the REL survey, measuring religiousness,
the scale did not make sense, ‘1’ should be
‘most important’ and ‘5’ should be ‘least
important.’”
Changed scale as recommended.
“Place the FSGO survey last, so those that
don’t have SEC clients would just bypass that
survey and go directly to the demographic
questions.”
Changed survey sequence as recommended.
“Fix some minor spelling errors.”
Fixed the several identified spelling errors.
Source: Personal interview by researcher.
Chapter 3: Method
Instrumentation
• Four instruments were used in this research study, the
– Multifactor Leadership Questionnaire (MLQ), or standard MLQ, or
also known as the MLQ 5X short, by Avolio and Bass (2004),
– Ethical Climate Questionnaire (ECQ), by Victor and Cullen (1987,
1988),
– Understanding of Federal Sentencing Guidelines for Organizations, by
researcher (2012), and
– Religiosity, by researcher (2012).
Chapter 3: Method
Researcher Error with ECQ Instrument
Proper Ethical Climate Questionnaire Scale and Scale Used in This Study
Proper ECQ Measurement Scale
Measurement Scale of this Study
0—Completely false
1—Mostly false
2—Somewhat false
3—Somewhat true
4—Mostly true
5—Completely true
1—Completely false
2—Mostly false
3—Somewhat false
4—Mostly true
5—Completely true
(Cont.)
Chapter 3: Method
Researcher Error with ECQ Instrument
(Cont.)
• According to Bart Victor, Ph.D. (personal communication,
August 2, 2012), who is one the originators of the Ethical
Climate Questionnaire (Victor and Cullen, 1988), this study’s
collected data would expect to still be meaningful. He
provided the following guidance,
. . . the data collection need not be reperformed; to address the scale
error in the ‘Methods’ section of the dissertation; to state that the
existing data means, variances, and correlations are meaningful and
reportable; to suggest that the scale errors do not cause a systemic or
universal disqualifying error, because the recorded survey
respondents’ impressions about the perceived ethical climate types
are still valid; to not transform the data, thus, to use the existing data
as is; and to check for similar intercorrelations and reliability.
Chapter 3: Method
Researcher Error with ECQ Instrument
Victor & Cullen, 1988,
Intercorrelations and
Cronbach’s Alphas
Climate Scales
2
3
4
5
1. Caring
.45 .42 -.40 .19
2. Law and code
.55 -.14 .07
3. Rules
-.09 -.07
4. Instrumental
.05
5. Independence
R > .06 (p < .05)
Alpha
.80
.79
.79
.71
.60
This Study’s
Intercorrelations and
Cronbach’s Alphas
Climate Scales
1.
2.
3.
4.
5.
2
3
4
5
Caring
.35 .49 -.16 .18
Law and code
.68 -.38 .04
Rules
-.39 .10
Instrumental
.10
Independence
Alpha
.62
.68
.76
.83
.69
(Cont.)
Chapter 3: Method
Correlation Analysis Interpretive Scale
Guilford Interpretation of the Magnitude of Significant Correlations
Absolute Value of Rho (r)
Interpretation
< .20
Slight, almost no relationship
.20 - .39
Low correlation, definite but small relationship
.40 – .69
Moderate correlation, substantial relationship
.70 – .89
High correlation, strong relationship
.90 – 1.00
Very high correlation, very dependable relationship
Source: Van Aswegen & Engelbrecht, 2009, p. 5.
Chapter 3: Method
ANOVA Analysis
• Prior to running the ANOVA analyses, assumptions for
ANOVA were tested. The assumptions for normality were
tested, which ascertain that the scores be normally
distribution around the mean of the dependent variable.
Histograms were developed for all the dependent variable
ethical climate types.
• Also tested was the homogeneity of variance, which requires
that the groups have equal variances in the population.
Scatterplots of dependent variable’s various ethical climate
types were constructed to determine the absence of
heteroscedasticity. Both histograms and scatterplot tests
were performed visually.
Chapter 3: Method
ANOVA Analysis
(Cont.)
• ANOVA analysis was performed for those correlative
relationships with statistical significance. ANOVA or analysis
of variance provided the F-crit statistic (F-test, F), R2, and
significance.
Chapter 3: Method
Univariate Analysis
• Statistical analysis also treated the demographic categories,
with sufficient subsample size, as independent variables.
• Running univariate analysis of variances between the
demographic independent variable and the leadership
independent variable to the ethical climate’s dependent
variables was performed. Those relationships that
demonstrated significant relationships were reported
Chapter 4: Results
Statistical Analyses
• Descriptive statistics
• Assumptions Regarding Models Used
– Normality of Distributions
– Homoscedasticity
• Findings for Hypothesis 1—Transformational Leadership’s
Relationships to Ethical Climates
• Findings for Hypothesis 2—Transactional Leadership’s
Relationships to Ethical Climates
• Findings for Hypothesis 3—Laissez-faire Leadership’s
Relationships to Ethical Climates
Chapter 4: Results
Statistical Analyses
• Findings for Hypothesis 4—Regulatory Influence Relationships
to Leadership and Ethical Climates
• Findings for Hypothesis 5—Religiosity’s Relationships to
Leadership and Ethical Climates
• Limited Cross-sectional Statistical Analysis
• Post Hoc Power and Effect Size Analysis
Chapter 4: Results
Descriptive Statistics
Respondents’ Personal Information
Age
<26
26-40
41-55
>55
Total
Freq. Gender
6 Female
74 Male
19
4
103
Total
Freq.
Educ.
Freq.
CPA?
Freq.
29
74
AS
BS
MS
JD, etc.
3
17
81
2
Yes
No
79
24
103
Total
103
Total
103
Chapter 4: Results
Descriptive Statistics
Respondents’ Relationship to and CPA Firm Information
Years
with
Firm Freq.
0-2
3-4
5-10
> 10
Total
Work
Function
18 Assurance
27
Tax
32 Consulting
26
Other
103
Total
Freq.
Respon.
Level
61
Partner
35 Manager
2 Supervisor
5
Staff
103
Total
Freq.
Firm
Size
11
Big 4
42
National
31
Regional
19 Local, large
Local, small
103
Total
Freq.
0
1
32
50
20
103
Chapter 4: Results
Findings for Hypothesis 1--Correlations
Transformational
(IV)
Caring Lawcode
(DV)
(DV)
Pearson Correlation
.411
Significance (2-tailed), p-value .000**
N
103
.282
.004**
103
Rules
(DV)
.402
.000**
103
Instrumental Independence
(DV)
(DV)
-.525
.000**
103
.093
.349
103
Chapter 4: Results
Findings for Hypothesis 1--ANOVA
Transformation Leadership to
Caring Ethical Climate
Model
Sum of
Squares
df
Regression
Residual
Total
187.525
921.678
1109.204
1
101
102
Model
Transformation Leadership to
Lawcode Ethical Climate
Regression
Residual
Total
Model
Transformation Leadership to
Rules Ethical Climate
Transformation Leadership to
Instrumental Ethical Climate
Regression
Residual
Total
Sum of
Squares
28.873
334.486
363.359
Sum of
Squares
72.129
373.521
445.650
Mean
Square
df
1
101
102
df
1
101
102
Model
Sum of
Squares
df
Regression
Residual
Total
648.221
1706.692
2354.913
1
101
102
187.525
9.126
Mean
Square
28.873
3.312
Mean
Square
72.129
3.698
Mean
Square
648.221
16.898
F-test
R2
Sig.
20.550
.169
.000**
R2
Sig.
.079
.004**
F-test
8.718
F-test
R2
Sig.
19.504
.162
.000**
F-test
R2
Sig.
38.361
.268
.000**
Chapter 4: Results
Findings for Hypothesis 2--Correlations
Transactional
(IV)
Pearson Correlation (Rho)
Significance (2-tailed), p-value
N
Caring Lawcode Rules Instrumental Independence
(DV)
(DV)
(DV)
(DV)
(DV)
.054
.591
103
.149
.132
103
.152
.125
103
.054
.585
103
-.038
.072
103
Chapter 4: Results
Findings for Hypothesis 3--Correlations
Laissez-faire
(IV)
Pearson Correlation (Rho)
Significance (2-tailed), p-value
N
Caring Lawcode Rules Instrumental Independence
(DV)
(DV)
(DV)
(DV)
(DV)
-.073
.462
103
-.143
.151
103
-.237
.016*
103
.247
.012*
103
.010
.919
103
Chapter 4: Results
Findings for Hypothesis 3--ANOVA
Laissez-faire Leadership to
Rules Ethical Climate
Model
Laissez-faire Leadership to
Instrumental Ethical Climate
Model
Regression
Residual
Total
Sum of
Squares
24.995
420.655
445.650
Sum of
Squares
Regression 143.840
Residual
2211.073
Total
2354.913
df
Mean
Square
1 24.995
101 4.165
102
df
1
101
102
Mean
Square
143.840
21.892
F-test
6.001
F-test
6.570
R2
Sig.
.056
.016*
R2
Sig.
.061
.012*
Chapter 4: Results
Findings for Hypothesis 4—Correlations
FSGO Understanding
(IV)
Pearson Correlation
Significance, (2-tailed), p-value
N
Caring Lawcode Rules Instrumental Independence
(DV)
(DV)
(DV)
(DV)
(DV)
-.002
.990
49
.220
.129
49
.165
.257
49
-.284
.048*
49
.048
.742
49
Chapter 4: Results
Findings for Hypothesis 5--Correlations
REL Religiosity
(IV)
Pearson Correlation (Rho)
Significance (2-tailed), p-value
N
Caring Lawcode Rules Instrumental Independence
(DV)
(DV)
(DV)
(DV)
(DV)
-.091
.363
103
-.043
.669
103
-.084
.401
103
.021
.831
103
-.110
.268
103
Chapter 4: Results
Cross-sectional Analyses
• To understand the significant interaction between gender (or with
any other demographic independent variable), and transformational leadership (or any
other independent variable), on the caring ethical climate type perception (or
any other dependent variable), the transformational leadership (or any other independent
variable) was grouped into those scoring higher than one standard
deviation (+1SD) and those scoring lower than one standard
deviation (-1SD) and plotted with gender (or with any other demographic
independent variable).
Chapter 4: Results
Limited Cross-sectional Statistical Analysis
Gender/Transformational Leadership to Caring Ethical Climate
Category D2
(Gender)
Female (1)
Male (2)
Total
Source
Corrected Model
Intercept
Gender (D2)
Transformational
Gender (D2) *
Transformational
Error
Total
Corrected Total
Frequency
29
74
103
Type III Sum
Of Squares
Mean Square
df
F
Sig.
a
254.542
1506.910
59.265
28.464
3
1
1
1
84.847
1506.910
59.265
28.464
9.828
174.553
6.865
3.297
.000
.000
.010
.072
48.949
854.662
63303.000
1109.204
1
99
103
102
48.949
8.633
5.670
.019*
Chapter 4: Results
Limited Cross-sectional Statistical Analysis
(Cont.)
Service Function/Transformational Leadership to Lawcode Ethical Climate
Category D8
(Service Function)
Frequency
Assurance (1)
Tax (2)
Total
Source
Corrected Model
Intercept
Assurance and Tax (D8)
Transformational
Assurance and Tax (D8) *
Transformational
Error
Total
Corrected Total
61
35
96
Type III Sum
Of Squares
50.463 a
1348.360
20.225
14.507
16.339
292.162
30802.000
342.625
df
Mean
Square
3
16.821
1 1348.360
1
20.225
1
14.507
1
92
96
95
16.339
3.176
F
Sig.
5.297
424.591
6.369
4.568
.002
.000
.013
.035
5.145
.026*
Chapter 4: Results
Limited Cross-sectional Statistical Analysis (Cont.)
Service Function/Transformational Leadership to Rules Ethical Climate
Category D8
(Service Function)
Assurance (1)
Tax (2)
Total
Source
Corrected Model
Intercept
Assurance and Tax (D8)
Transformational
Assurance and Tax (D8) *
Transformational
Error
Total
Corrected Total
Frequency
61
35
96
Type III Sum
Of Squares
df
Mean
Square
F
Sig.
89.824 a
1069.929
26.019
35.826
3
1
1
1
29.941
1069.929
26.019
35.826
8.524
304.592
7.407
10.199
.000
.000
.008
.002
23.310
323.165
28191.000
412.990
1
92
96
95
23.310
3.513
6.636
.012*
Chapter 4: Results
Limited Cross-sectional Statistical Analysis (Cont.)
Licensed CPA?/Transformational Leadership to Rules Ethical Climate
Source
Corrected Model
Intercept
CPA? (D9)
Transformational
CPA? (D9) *
Transformational
Error
Total
Corrected Total
Type III Sum
Of Squares
Mean
Square
df
99.567 a
813.263
27.149
91.979
3
1
1
1
33.189
813.263
27.149
91.979
23.876
346.083
30009.000
445.650
1
99
103
102
23.876
3.496
F
9.494
232.641
7.766
26.311
Sig.
.000
.000
.006
.000
6.830 .010**
Chapter 4: Results
Limited Cross-sectional Statistical Analysis (Cont.)
Firm Size/Transformational Leadership to Lawcode Ethical Climate
Category D11
(Firm Size)
Frequency
Regional
Local, large 25+
Local, small
Total
Source
Corrected Model
Intercept
Firm Size (D11)
Transformational
Firm Size (D11) *
Transformational
Error
Total
Corrected Total
32
50
20
102
Type III Sum
Of Squares
Mean
Square
df
F
Sig.
69.601 a
147.678
6.100
23.938
3
1
1
1
23.200
147.678
6.100
23.938
7.819
49.769
2.056
8.067
.000
.000
.155
.005
13.106
293.758
33269.000
363.359
1
99
103
102
13.106
2.967
4.417
.038*
Chapter 4: Results
Limited Cross-sectional Statistical Analysis (Cont.)
Licensed CPA?/Transactional Leadership to Rules Ethical Climate
Source
Corrected Model
Intercept
Transactional
CPA? (D9)
CPA? (D9) *
Transactional
Error
Total
Corrected Total
Type III Sum
Of Squares
Mean
Square
df
F
Sig.
32.366 a
684.151
19.079
20.518
3
1
1
1
10.789
684.151
19.079
20.518
2.584
163.885
4.570
4.915
.058
.000
.035
.029
17.359
413.284
30009.000
445.650
1
99
103
102
17.359
4.175
4.158
.044*
Chapter 4: Results
Limited Cross-sectional Statistical Analysis (Cont.)
Years with Firm/Lassiez-faire Leadership to Lawcode Ethical Climate
Category D7
(Years with
firm)
0–2
3–4
5 – 10
10+ years
Total
Source
Corrected Model
Intercept
LFL
Time with Firm (D7)
Time with Firm (D7) *
LFL
Error
Total
Corrected Total
Frequency
18
27
32
26
103
Type III Sum
Of Squares
df
Mean
Square
F
Sig.
66.219 a
5937.012
4.082
40.450
7
1
1
3
9.460
5937.012
4.082
13.483
3.024
1898.146
1.305
4.311
.006
.000
.256
.007
38.792
297.141
33269.000
363.359
3
95
103
102
12.931
3.128
4.134
.008**
Chapter 4: Results
Post Hoc Power and Effect Size Analysis
Post Hoc Power and Effect Size Analysis
Hypothesis
Post
(eta2)
Hoc
Effect
Alpha
P-value
df
Power
Size
H1, Transformational to Caring
.05
.000**
102
.92
.53
H1, Transformation to Lawcode
.05
.004*
102
.86
.54
H1, Transformation to Rules
.05
.000**
102
.93
.56
H1, Transformation to Instrumental
.05
.000**
102
.93
.56
H3, Laissez-faire to Rules
.05
.016*
102
.71
.18
H3, Laissez-faire to Instrumental
.05
.012*
102
.73
.17
H4, Understanding FSGO to Instrumental
.05
.048*
48
.51
.33
Chapter 4: Results
Summary
(Cont.)
• Regarding the primary theoretical model’s dependent
(ethical climate perception) and independent variables
(perceived focal leader’s leadership style), the findings:
– show a statistically significant relationship between
transformational leadership and four ethical climate type
perceptions (i.e., caring, lawcode, rules, and instrumental).
– demonstrate no statistically significant relationship between
transactional leadership and all five of the ethical climate type
perceptions.
– reveal that laissez-faire leadership exhibits a statistically
significant, although weak negative correlative influence on
the rules ethical climate type perception and a statistically
positive correlative influence on the instrumental ethical
climate type perceptions.
Chapter 4: Results
Summary (Cont.)
• With regard to this study’s theoretical framework’s proposed
moderating or intervening variables, the survey respondents’
understanding of the Federal Sentencing Guidelines for
Organizations (FSGO) recommendations and the survey
respondents’ religiosity, the following finding were observed:
– respondents’ understanding the Federal Sentencing Guidelines for
Organizations’ (FSGO) recommendations has a slightly negative
correlative relationship with the instrumental ethical climate type
perception.
– there was no statistically significant relationship between the
moderating variable of understanding the FSGO recommendations to
any leadership style.
– religiosity showed no statistical correlative relationship with any
ethical climate type. Additionally, no statistical correlative
relationship exists between the moderating variable of religiosity and
any leadership style.
Chapter 5: Conclusions and Recommendations
Frequency Means of Leadership Recognized
Frequency Means of Leadership Style Recognized
Leadership Style
Mean
Std. Dev.
Transformational
Transactional
Laissez-faire
2.53
1.89
1.31
0.626
0.369
0.647
MLQ Frequency Key: 0.0 = Not at all, 1.0 – Once in a while,
2.0 = Sometimes, 3.0 = Fairly often, and 4.0 = Frequently, if not always
Chapter 5: Conclusions and Recommendations
Research Question 1
• To what degree do partners, managers, and supervisors’
various leadership styles affect the subordinate’s perception
of what are ethical expectations and behaviors to be
followed?
Chapter 5: Conclusions and Recommendations
Transformational Leadership’s Effect
• Transformation leadership influence subordinates to become
aware of what is important to the accounting firm, such as
performance expectations, as well as convinces subordinates
to higher levels of moral and ethical standards (Antonakis and House, 2002;
MLQ, 1995; MLQ, 2004)
• Analysis of descriptive statistics, such as, means and standard
deviations of the three major leadership characteristics or
styles reveal that transformational leadership was the most
often leadership style recognized.
Chapter 5: Conclusions and Recommendations
Transformational Leadership’s to Caring
(Cont.)
•
Table 61
Leadership’s Impact on Recognition of the Caring Ethical Climate
Leadership Style
Rho
Sig.
N
Transformational
Transactional
Laissez-faire
.411
.054
-.073
.000**
.591
.462
103
103
103
•
**. P-value, correlation is significant at the .01 level (2-tailed).
•
Professionals working in a recognized caring
ethical climate are concerned with being
considerate toward others, focus on team play,
and considerate of constituents outside the
organization. Accounting professionals operating
in a caring ethical climate are concerned about
social responsibilities.
The AICPA principles of professional conduct
mandate that the “public interest” subordinate
all personal and firm interest. Complying with
social responsibilities and expectations of ethical
conduct is very beneficial to the ethical, as well
as, legal sustainability of the accounting firm.
Transformational leadership had the only
statistically significant relationship with the
caring ethical climate. Transactional and laissezfaire leadership style does not engender a loyalty
derived from leader caring and support or does
not encourage concern for the public interest.
Chapter 5: Conclusions and Recommendations
Transformational Leadership’s to Caring
(Cont.)
Transformational
Leadership Style
Scale
Scale Definition
The leader . . .
Idealized Attributes Instills pride in others for
being associated with the
leader
An Example of How a Utah Accounting Firm
Leader Could Employ Transformational
Behavior
At the onset, during, and the end of an
engagement activity, let your subordinate
know how appreciative you are in leading an
engagement activity with the subordinate
and that both should grow from the
experience
Goes beyond self-interest
for the good of the group
Always show personal interest in the
subordinate’s success by selflessly helping
and advising work efficiencies in a timely
manner
Acts in ways that build
others’ respect for the
leader
Always act respectfully of others, at all
times, and always show respect to and
about the subordinate when interacting
with clients or colleagues
Displays a sense of power
and confidence
At an appropriate time, discuss a sense of
responsibility and loyalty to the accounting
firm and confidence about the
engagement’s successful completion and
purpose
Chapter 5: Conclusions and Recommendations
Transformational Leadership’s to Caring
(Cont.)
Transformational
Leadership Style Scale
Idealized Behaviors
Scale Definition
The leader . . .
An Example of How a Utah Accounting Firm Leader
Could Employ Transformational Behavior
Talks about the most important
values and beliefs
During engagement activities’ reflective opportunities
(i.e, during meals, reviewing subordinates’ work,
discussing client difficulties) share personal companyrelated, professional-related, or personal-related
values and beliefs
Specifies the importance of
having a strong sense of purpose
At appropriate times, express the importance of the
professional accounting profession’s responsibility to
the public’s interest and how the firm’s services add
to client efficiencies, compliance, and sustainability
Considers the moral and ethical
consequences of decisions
At appropriate times, share your moral/ethical/legal
decision-making processes, compliant with the
accounting firm and or profession’s recommended
decision-making practices
Emphasizes the importance of
having a collective sense of
mission
At the onset of an engagement activity, speak of the
importance of team cohesion, problem-solving
agreement, and efficient and effectively completion of
the engagement activity
Chapter 5: Conclusions and Recommendations
Transformational Leadership’s to Caring
(Cont.)
Transformational
Leadership Style Scale
Inspirational Motivation
Scale Definition
The leader . . .
An Example of How a Utah Accounting Firm
Leader Could Employ Transformational
Behavior
Talks optimistically about When discussion allows, speak positively about
the future
the accounting firm’s future growth
opportunities and leadership opportunities for
the subordinate
Talks enthusiastically
about what needs to be
accomplished
During each engagement, be enthusiastic
about the engagement’s objectives and work
tasks to be completed by all involved
Articulates a compelling
vision of the future
When occasion arises, communicate the
strategic goals and objectives of the
accounting firm and how the subordinate fits
into the future success of the accounting firm
Expresses confidence
that goals will be
achieved
At the onset of the engagement, express the
potential work task difficulties and how the
leader and subordinate will work together to
complete the engagement successfully
Chapter 5: Conclusions and Recommendations
Transformational Leadership’s to Caring
(Cont.)
Transformational
Leadership Style Scale
Intellectual Stimulation
Scale Definition
The leader . . .
An Example of How a Utah Accounting Firm Leader
Could Employ Transformational Behavior
Re-examines critical
assumptions to question
whether they are appropriate
With each engagement, coach the subordinate about
how the engagement procedures can be more
efficiently performed, how worksheets should be
organized and designed to evidence procedures have
been properly performed, and how improvements from
the prior engagement can be employed
Seeks differing perspectives
when solving problems
Always seek subordinate input for solving client
engagement problems that arise
Gets others to look at
problems from many different
angles
Coach the subordinate about how to solve client
dilemmas, resolve accounting or tax measurement
problems, or use current professional literature to bring
another perspective to solving engagement difficulties
Suggests new ways of looking
at how to complete
assignments
At the onset of the engagement, coach the subordinate
about how up-line leaders might have changed or
reasons for not changing the engagement approach
Chapter 5: Conclusions and Recommendations
Transformational Leadership’s to Caring
(Cont.)
Transformational
Leadership Style Scale
Idealized Consideration
Scale Definition
The leader . . .
An Example of How a Utah Accounting Firm Leader
Could Employ Transformational Behavior
Spends time teaching and
coaching
During the whole engagement, the leader should
selflessly coach the subordinate how to improve the
craft of performing the required engagement
procedures
Treats others as individuals
rather than just as a member
of the group
Learn about your subordinate before commencing
the engagement. Learn his/her name, family
circumstances or status, interests, and past
performance with an objective of helping the
subordinate to improve is KSAs (i.e., knowledge,
skills, and abilities)
Considers each individual as
having different needs,
abilities, and aspirations from
others
Learn about the subordinate’s needs, abilities, and
aspirations to better coach his/her “career equity,”
so as to assist the subordinate in their desired
career path
Helps others to develop their
strengths
During the engagement and at the end, assist the
subordinate in developing their strengths with
during-the-engagement work practice
recommendations and a meaningful performance
evaluation
Chapter 5: Conclusions and Recommendations
Transformational Leadership’s to Lawcode
•
Transformational leadership has the highest positive correlative
effect on subordinates recognizing the lawcode ethical climate.
Accounting firms would prefer their leaders to demonstrate
transformation leadership, more often than not, simply to encourage
firm-wide compliance with laws, regulations, and professional practice
standards.
•
While performing univariate analysis of variances between the
demographic subject factors of who practice assurance services and
tax service, an interesting phenomenon arose. Those firm personnel
not only are influenced by transformational leadership and practicing
tax services but also experience a stronger perception of the lawcode
ethical climate than those in the firm practicing assurance services.
Perhaps the tax personnel are more sensitive to the lawcode ethical
climate because of their required understanding of voluminous tax
law’s authoritative sources (i.e., legislative tax law, administrative tax
law, and judicial tax law). Also, tax professionals must also be aware of
the generally accepted accounting principles (GAAP)
Table 63
Leadership’s Impact on Recognition of
the Lawcode Ethical Climate
Leadership Style
Rho
Sig.
N
Transformational
Transactional
Laissez-faire
.282
.149
-.143
.004**
.132
.151
103
103
103
**. P-value, correlation is significant at the .01 level (2-tailed).
Chapter 5: Conclusions and Recommendations
Transformational Leadership’s to Rules
•
From Table 64, it can be seen that transformational leadership has the
only variable that shows statistically significant and highest correlative
relationship to the rules ethical climate.
•
Also, Utah CPA firms should be aware that CPA licensed personnel, while
influenced by transformational leadership, recognize a higher level of
rules ethical climate type than those not having earned their CPA
licensure.
•
Perhaps this phenomenon arises from the stronger appreciation of
quality control compliance requirements with firm rules, policies, and
procedures protocol for maintaining licensure and practice permission
from peer quality reviews. Additionally, personnel from larger CPA firms,
while influenced by transformational leadership perceived a higher level of
the rules ethical climate, than those personnel from smaller CPA firms.
This phenomenon may exist because larger CPA firms are perhaps
performing more high-level assurance and tax services engagements,
requiring greater understanding and compliance with in-firm policies,
procedures, and practices, such as, for those collaborative intra-office
procedures for multi-city client engagements. Personnel from larger CPA
firms would necessarily be more sensitive to complying with intracompany policies, procedures, and practices.
Table 64
Leadership’s Impact on Recognition of the
Rules Ethical Climate
Leadership Style
Rho
Sig.
N
Transformational
Transactional
Laissez-faire
.402
.152
-.237
.000**
.125
.016*
103
103
103
*. P-value, correlation is significant at the .05 level (2-tailed).
**. P-value, correlation is significant at the .01 level (2-tailed).
Chapter 5: Conclusions and Recommendations
Transformational Leadership’s to Instrumental
Table 65
Leadership’s Impact on Recognition of the
Instrumental Ethical Climate
Leadership Style
Rho
Sig.
N
Transformational
Transactional
Laissez-faire
-.525
.054
.247
.000**
.585
.012*
103
103
103
*. P-value, correlation is significant at the .05 level (2-tailed).
**. P-value, correlation is significant at the .01 level (2-tailed).
•
Because transformational leadership suppresses the recognition of this
individual- and company-egoistic position, as evidence by the negative
correlative relationship, transformational leadership is important in lifting the
subordinates’ conduct to higher levels of ethical preferences.
•
Laissez-fair leadership also had a statistically significant and positively
correlated relationship with this deleterious instrumental leadership style.
Accounting firms have strong reporting, review, and follow-up policies. These
procedures help ensure that auditing and tax engagement procedures are
performed, evidence is properly assessed, and that the conclusion by the
subordinate accounting professional are reasonable under the circumstances.
Utah’s public accounting leaders demonstrate very low level of the laissez-faire
leadership style. Utah’s public accounting leaders leadership practices support
that which has been found in other nation-wide accounting leadership
research, that transformational and transactional leadership is widely
prevalent (Early and Davenport, 2010).
Chapter 5: Conclusions and Recommendations
Transformational Leadership’s to Independence
Table 66
Leadership’s Impact on Recognition of the
Independence Ethical Climate
Leadership Style
Rho
Sig.
N
Transformational
Transactional
Laissez-faire
.093
-.038
.010
.349
.072
.919
103
103
103
•
Professional accounting subordinates working in an independence ethical climate
type are left to their own personal and moral beliefs driving their ethical
behavior. Leaving the accounting professional to their own beliefs of right and
wrong and demonstrating their own personal ethics, regardless of rules, laws,
regulations, and firm policies and procedures is problematic.
•
If the subordinates’ personal beliefs of right and wrong differ from the principles
of the AICPA Code of Professional Conduct’s regard for the public interest, deviate
from promulgated professional standards, dismiss firm policies and procedures,
injurious ramifications are more likely to result from engagement activities.
When subordinate accounting professionals are left alone to exercise professional
judgment, the independence climate type is not sufficient to protect the
accounting firm, if the personal philosophy, moral compass, and regard for
established standards and conduct are different with the accounting subordinate.
Next, the interpretations, conclusions, and recommendations for transactional
leadership follow.
Chapter 5: Conclusions and Recommendations
Transactional Leadership’s to Ethical Climates
•
Table 67
Transactional Leadership Impact on All Ethical
Climate Types
Ethical Climate Type
Rho
Sig.
N
Caring
Lawcode
Rules
Instrumental
Independence
.054
.149
.152
.054
-.038
.591
.132
.125
.585
.072
103
103
103
103
103
In Utah’s local-small, local-large, and regionally sized CPA firms, transactional
leadership does not lend itself to having subordinates recognize any particular
ethical climate type. Transactional leadership is not necessarily bad; however, in
Utah public accounting, too much transactional leadership could retard
subordinates to not be more fully aware of preferred ethical climate types. Ethical
behavior is better remembered when reminded through perceiving a preferred
ethical climate (i.e., caring, lawcode, or rules). In Utah’s public accounting
profession, higher-level leadership (i.e., inclining toward transformational
leadership) helps keep professional accounting subordinates compliant with Code
of Conduct expectations, quality control policies and procedures, firm-wide ethical
policies and procedures, and professional practice standards. The preferred ethical
perceptions also help the professional accountant remember and be sensitive
toward the overarching mandated philosophy that the public’s interest
fundamentally guides our ethical actions.
Chapter 5: Conclusions and Recommendations
Transactional Leadership to Higher Leadership Form
Chapter 5: Conclusions and Recommendations
Laissez-faire Leadership
•
Laissez-faire Leadership Impact on All Ethical
Climate Types
Ethical Climate Type
Rho
Sig.
N
Caring
Lawcode
Rules
Instrumental
Independence
-.073
-.143
-.237
.247
.010
.462
.151
.016*
.012*
.919
103
103
103
103
103
While Utah accounting leaders, in local-small, local-large, and regionally-sized
CPA firms, exhibit laissez-faire leadership, subordinates’ perceive less of the rules
ethical climate type. Too much laissez-faire leadership could lead subordinates to
be reckless regarding compliance with rules, standards, and or ethical
expectations. Additionally, laissez-faire leadership moves in the same direction
as instrumental ethical climate perception. The more a focal leader exhibits
laissez-faire leadership, the higher the probability of observing more
instrumental ethical climate is recognized. The subordinate may well believe that
self-interests and company-interests are more important factors in making
ethical decisions. Utah CPA firms would do well to avoid subordinates’ from
moving away from caring about the public’s interests in ethical decision-making,
by avoiding laissez-faire leadership style.
Chapter 5: Conclusions and Recommendations
Summary—Research Question 1
•
Utah’s accounting firms do well by having their subordinates more often identify their focal leaders with
transformational leadership near more fairly often, followed by near sometimes transactional leadership,
and last with near once in a while laissez-faire leadership. Improving transformation leadership, through
continuous leadership training and evaluating leaders for their consistency in exhibiting transformational
leadership behaviors and patterns, as recommended in Table 62 (Transformational Building Actions and
Behaviors), is strongly suggested. Perceive the preferred caring, lawcode and rules ethical climates types.
•
Unfortunately, even if Utah CPA firms have ethical expectations for their professional subordinates,
transactional leadership does not persuade subordinates to recognize, to any statistical significance, the
preferred ethical climate types. When Utah’s public accounting leaders exhibit transactional leadership,
not much will drive subordinates to recognizing the preferred ethical climate types. Transactional
leadership will persist in public accounting practice, by the sheer nature of its deadline-oriented, time
constrained, standards and regulatory-compliance rigor, and precise reporting engagement activities.
•
Last, Utah CPA firms should eradicate any laissez-faire leadership tendencies that arise with any level of
the firm’s leadership structure. Laissez-faire leadership can put Utah CPA firms at risk of ethical failure.
Identifying whether subordinates’ perceive laissez-faire leadership form their local leaders can only be
detected by upward evaluations or anecdotal observations by other leaders. Subordinates are loath to
report poor leadership of their focal leaders, so formal upward evaluations should be performed on an
anonymous basis. When focal leaders are found to be exhibiting laissez-faire leadership, corrective
intervention training should occur.
Chapter 5: Conclusions and Recommendations
Research Question 2
• To what degree does the subordinate’s knowledge of
regulatory influence affect the subordinate’s perception of the
ethical climate and the focal leader’s leadership?
Chapter 5: Conclusions and Recommendations
FSGO Regulations Effect on Ethical Climates
Chapter 5: Conclusions and Recommendations
FSGO Regulations Effect on Ethical Climates
•
•
•
•
Instrumental leadership style places the leader’s self-interest above others,
depicts leaders the company mostly out for themselves, disallows room for
personal morality, accepts substandard work product, so along as the company is
not harmed.
Basically, instrumental leadership is antithetical to the objectives of the Federal
Sentencing Guidelines for Organizations. When Utah accounting professionals are
aware of regulatory requirements, they recognize less of the instrumental ethical
climate type.
The instrumental ethical climate type is perhaps the worst ethical climate type
that a CPA firm would hope exists among the perceptions of their professional
subordinates.
Instrumental ethical climate’s self-interest could lead toward dangerously careless
attitudes regarding professional standards and regulatory requirements. Such
disregard of standards and regulations could lead to professional error,
negligence, or inclinations toward fraud.
Chapter 5: Conclusions and Recommendations
Research Question 3
• To what degree does the subordinate’s religiosity or
compassionate service affect the subordinate’s perception of
the ethical climate and the focal leader’s leadership?
Chapter 5: Conclusions and Recommendations
Religiosity’s Effect on Ethical Climates
Chapter 5: Conclusions and Recommendations
Religiosity’s Effect on Ethical Climates
•
•
•
•
One would anticipate that high religiosity and compassionate
service activity would positively correlate with the caring
ethical, and perhaps the lawcode and independence ethical
climate types. This assumption was based on the notion that
philosophy and religion are closely aligned with ethic’s
theories and models of ethical behavior.
Because the survey respondents virtually all answered weekly
church activity and weekly to monthly compassionate service
activity, there could exists a “ceiling effect” that makes
correlation analyses more difficult to associate among the
differing ethical climate type perceptions and leadership
styles.
There could be a serious range restriction found in the
religiosity scale or the properties of the sample respondents
(i.e., all highly religious) spoiled the desired variability of
responses over the possible scale responses (Schmidt 2012).
This correlation analysis perhaps required larger and more
distributed religiosity response samples over the possible
responses to show correlative association with multiple
dependent variables. The distribution statistics for the
religiosity scale is shown to the left.
Chapter 5: Conclusions and Recommendations
Religiosity’s Effect on Ethical Climates
• As can be seen, the sample is positively skewed to the
left and tails sharply to the right. Apparently, either the
measuring instrument was not sufficiently constructed to
differentiate on one side of the measuring scale or the
sample size was not sufficiently large to possess
differentiation among respondents.
• Utah is a highly religious state, with many members of
the Church of Jesus Christ of Latter-day Saints, who are
unique as a religious group in that the active members
are strongly engaged with religious and compassionate
services (Cnaan, Evans, & Curtis, 2012)
Chapter 5: Conclusions and Recommendations
Limitations, Improvements, & Suggestions
• Limitations
– Sample representation and sample size
•
Future research, of this sort, should seek to obtain larger sample sizes. Academic researchers need to
somehow break down the barrier of fear and suspicion, exacerbated in our litigious society, between
academic researchers and owners and legal counsel of national and international firms. Perhaps more
collaborative research, with in-firm corporate research specialists and academics, where greater
trust could be built and control over findings can be contractually and amicably handled could be a
way in.
– Survey Analysis and Bias
•
Because this web-based research study was rather lengthy and required all four surveys, plus a robust
demographic section to be filled out, the researcher is not aware of how many partially-completed surveys
were electronically abandoned. Partially-completed surveys were not electronically submitted, and thus,
examination for sample bias by comparing full survey respondents’ answers with known incomplete
respondents’ answers was not possible. Future research could perhaps, if collaboratively linked with corporate
researchers, be present at the various firms’ and help personally administer the survey and obtain a higher
with-in firm response rate.
Chapter 5: Conclusions and Recommendations
Limitations, Improvements, & Suggestions
• Improvements
– Statistical Inferences and Theoretical Construct
Development
•
•
This study took a quantitative approach with a correlation design. Relationships between the
variables were described as to their movement with respect to each other and their strength of
statistical relationship to each other. By no means are these findings causative. However, the
conceptual design of this study’s theoretical model is strongly supported by logic. A person’s moral
development, immediate supervisor’s leadership style, known company understanding for the
regulatory and professional conduct standards, and religiosity would seem to influence their
perception of their prescribed ethical inclinations and conduct.
Inference limitation relates to the lack of variability in the survey respondents’ answers for describing
their religiousness. Virtually all survey respondents’ classified themselves as weekly churchgoers and
or providing compassionate service to others. Perhaps the religiosity’s construct validity is not
adequately defined. This study’s religiosity definition was not as well defined to represent the
underlying true population’s perceptions regarding religious salience. Or possibly, the lack of variability
about their religiousness could have created a “ceiling” effect and skewed the responses for
correlation analysis. This phenomenon, in which 89 of the 103 survey respondents identified
themselves as rather highly religious could also tainted the overall findings, if only religious
professional accounting staff felt inclined to complete the survey. In the future, perhaps a religiosity
survey (i.e., religious identity, religious salience, and religious conviction) is not warranted, but rather a
survey of servant-style and compassionate-service attributes could be used to correlate such
attributes with influence on ethical work climate perceptions.
Chapter 5: Conclusions and Recommendations
Limitations, Improvements, & Suggestions
• Improvements
– Inadequacy of the Transactional Leadership for
Ethical Climate Awareness
•
The independent variable, transactional leadership style, produced non-statistical results, with respect to the
impact of the subordinate’s perception of their ethical workplace climate. However, upon deeper correlation
analysis and ANOVA analysis, accepted leadership subscales of contingent reward and management-byexception active had statistical correlation and significance. Transactional leadership has, in previous
research, been problematic in accounting profession research.
•
In the future, perhaps some exploratory qualitative research can better understanding how transactional
leadership style’s subscales of contingent reward, management-by-exception—passive, and management-byexception—active, is present and utilized in the public accounting profession. Then a better quantitative
research conceptual model could be posited.
Chapter 5: Conclusions and Recommendations
Limitations, Improvements, & Suggestions
• Suggestions for Future Research
•
First, with appropriate corrections for the ECQ Survey instrument, this study can be replicated in
other professional public accounting jurisdictions. The accumulation of future replications can add to
the aggregating of a larger, robust sample, perhaps leading to a meta-analysis.
•
Second, better religiosity construct development can be pursued.
•
Third, further research opportunities. For example,
–
–
–
–
why in Utah do women’s employment percentages nearly shrink in half, over time?
Why do men represent a higher percentage in the accounting profession’s senior positions?
What are the social factors creating a “glass ceiling” effect in Utah’s public accounting profession?
Why does the public accounting profession continue to appear unattractive to minority persons?
•
Fourth, can better process-based management philosophies, with leadership training interventions,
further bend the Utah public accounting leadership culture more toward transformational
leadership, less towards transactional, and the eradication of laissez-faire leadership?
•
Fifth, could accounting firms that improve their transformational leadership practices,
–
–
heighten the subordinates’ perception to the more preferred ethical climate types (i.e., caring, lawcode, and
rules) ?
earn higher employee satisfaction, experience less professional staff turnover, and increase profitability?
References
Provided in the separate chapter PowerPoint presentations