Journal Archive

korean management review - Vol. 51 , No. 1

[Paper List] [Go to Volume List]


[ Article ]
korean management review - Vol. 51, No. 1, pp. 127-146
Abbreviation: kmr
ISSN: 1226-1874 (Print)
Print publication date 28 Feb 2022
Received 31 Aug 2021 Accepted 22 Oct 2021
DOI: https://doi.org/10.17287/kmr.2022.51.1.127
The Effect of Ethical Education on Accounting Fraud: Fraud education for Business and Accounting Students
Jae Mee Yoo ; Mi Lim Chon ; Woojae Choi
(First Author) School of Business, Cheongju University (yoojm@cju.ac.kr)
(Corresponding Author) School of Business, Cheongju University (milim@cju.ac.kr)
(Co-Author) School of Business, Cheongju University (choiwj@cju.ac.kr)
윤리 교육은 회계 부정 행위를 막을 수 있을까?: 윤리 교육이 경영/회계전공 학생의 윤리적 의사결정에 미치는 영향

Copyright 2011 THE KOREAN ACADEMIC SOCIETY OF BUSINESS ADMINISTRATION This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted, distribution, and reproduction in any medium, provided the original work is properly cited.


Funding Information ▼ Ministry of Education National Research Foundation of Korea NRF-2017S1A5A2A03069098

Abstract

This study explores the relationship between ethical education and accounting fraud, one of the representative unethical behaviors of firms. In the experiment, the subjects attend a special lecture on ethical issues such as agency problems and moral hazards. The direct effect of education on the intentions of ethical behavior is explored by comparing the intentions of the subjects in the control group with no treatment. In addition, the mechanism by which the effect of ethical education occurs and the difference in the effect of ethical education by the regulatory focus of subjects are investigated. It is verified that ethical education significantly reduces the intention to commit financial statement fraud in the ethical dilemma based on Cressy's fraud triangle. It is also found that moral philosophy (idealism) mediated the relationship between education and intentions of ethical behavior. Ethical education increases the idealism that leads an individual's moral judgment and in turn, it reduces the intentions of unethical behavior. Moreover, the intentions of unethical behavior are significantly more reduced in those with prevention focus compared to those with promotion focus.


Keywords: ESG, accounting fraud, ethical education, fraud triangle, moral philosophy, regulatory focus

Acknowledgments

This research is supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea (NRF-2017S1A5A2A03069098).

References


1.	Albrecht, C., D. Holland, and R. Malagueño(2015), “The Role of Power in Financial Statement Fraud Schemes,” Journal of Business Ethics, 131, pp.803-813.
2.	Aquino, K., and A. Reed II(2002), “The Self-Importance of Moral Identity,” Journal of Personality and Social Psychology, 83(6), pp.1423-1440.
3.	Arkelof, G. A.(1970), “The Market for ‘Lemons’: Quality Uncertainty and The Market Mechanism,” Quarterly Journal of Economics, 84(3), pp 488-500.
4.	Barnett, T. and C. Vaicys(2000), “The Moderating Effect of Individuals' Perception of Ethical Work Climate on Ethical Judgments and Behavioral Intentions,” Journal of Business Ethics, 27(4), pp.351-362.
5.	Beneish, M. D.(1999), “Incentives and Penalties Related to Earnings Overstatements that Violate GAAP,” The Accounting Review, 74(4), pp.425-457.
6.	Cressy, D. R.(1953), Other People’s Money: A Study in the Social Psychology of Embezzlement, in IOFP(Institute for Occupational Fraud Prevention)(Eds.), Corporate Fraud Theory and Prevention Strategies: Corporate Fraud Prevention Report (pp.50-75), http://www.iofp.or.kr/bbs/board.php?bo_table=BBS &wr_id=19 (retrieved March 2021, original work published 1953).
7.	Cesario, J., H. Grant, and E. T. Higgins(2004), “Regulatory Fit and Persuasion: Transfer from “Feeling Right”,” Journal of Personality and Social Psychology, 86(3), pp.388-404.
8.	Douglas, P. C., and B. Wier(2000), “Integrating Ethical Dimensions into a Model of Budgetary Slack Creation,” Journal of Business Ethics, 28(3), pp.267-277.
9.	Dorminey, J. W., A. S. Fleming, M. J. Kranancher, and R. A. Riley Jr(2010), “Beyond the Fraud Triangle: Enhancing Deterrence of Economic Crimes,” The CPA Journal, 80(7), pp.17-23.
*10.*	Elias, R. Z.(2002), “Accountants' Perceptions of the Ethics of Earnings Management,” Research on Accounting Ethics, 8, pp.103-124.
*11.*	Forsyth, D. R.(1980), “A Taxonomy of Ethical Ideologies,” Journal of Personality and Social psychology, 39(1), pp.175-184.
*12.*	Forsyth, D. R.(2019). Making Moral Judgments: Psychological Perspectives on Morality, Ethics, and Decision-Making[Adobe Digital Edition Version].
*13.*	Fraedrich, J. P. and O. C. Ferrell(1992), “The Impact of Perceived Risk and Moral Philosophy Type on Ethical Decision Making in Organizations,” Journal of Business Research, 24, pp.283-295.
*14.*	Goolsby, J. R. and S. D. Hunt(1992), “Cognitive Moral Development and Marketing,” Journal of Marketing, 56(1), pp.55-68.
*15.*	Hayes, A. F.(2017). Introduction to Mediation, Moderation, and Conditional Process Analysis: A Regression-Based Approach, New York, Guilford publications,
*16.*	Healy, P. M. and K. G. Palepu(2001), “Information Asymmetry, Corporation Disclosure, and the Capital markets: A Review of the Empirical Disclosure Literature,” Journal of Accounting and Economics, 31(1-3), pp.405-440.
*17.*	Higgins, E. T.(1997), “Beyond Pleasure and Pain,” American Psychologist, 52(12), pp.1280-1300.
*18.*	Higgins, E. T.(1998), “Promotion and Prevention: Regulatory Focus as a Motivational Principle,” Advances in Experimental Social Psychology, 30, pp.1-46.
*19.*	Hunt, S. D., and D. A. Laverie(2004), “Experiential Learning and the Hunt-Vitell Theory of Ethics: Teaching Marketing Ethics by Integrating Theory and Practice,” Marketing Education Review, 14(3), pp.1-14.
*20.*	Hunt, S. D. and S. J. Vitell(1986), “A General Theory of Marketing Ethics,” Journal of Macromarketing, 6(1), pp.5-16.
*21.*	Jensen, M. C., and W. H. Meckling(1976), “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure,” Journal of Financial Economics, 3(4), pp.305-360.
*22.*	Jones, T. M.(1991), “Ethical Decision Making by Individuals in Organizations: An Issue-Contingent Model,” Academy of Management Review, 16(2), pp. 366-395.
*23.*	Jung, J. E.(2001), “The Influence of Adverse Selection Conditions and Ethical Reasoning on the Tax Officials` Decision Making,” Korean Management Review, 30(4), pp.1203-1223.
*24.*	Kish-Gephart, J. J., D. A. Harrison, and L. K. Treviño(2010), “Bad Apples, Bad Cases, and Bad Barrels: Meta-Analytic Evidence about Sources of Unethical Decisions at Work,” Journal of Applied Psychology, 95(1), pp.1-31.
*25.*	Kohlberg, L.(1981). The Philosophy of Moral Development: Moral Stages and the Idea of Justice (M. N. Kim et al., Trans.), Seoul, Kyoyookbook, 2000,(original work published in 1981, New York, Harper & Row).
*26.*	Lee, M.G. and S.J. Chang(2012), “The Necessity for Education to Deter Accounting Fraud and the Directions of Accounting Fraud Education,” Study on Accounting, Taxation & Auditing, 54(2), pp.41-76.
*27.*	Lockwood, P., C. H. Jordan, and Z. Kunda(2002), “Motivation by Positive or Negative Role Models: Regulatory Focus Determines Who Will Best Inspire Us,” Journal of Personality and Social Psychology, 83(4), pp.854-864.
*28.*	Martinov-Bennie, N. and , R. Mladenovic(2015). “Investigation of the Impact of an Ethical Framework and an Integrated Ethics Education on Accounting Students’ Ethical Sensitivity and Judgment,” Journal of Business Ethics, 127(1), pp. 189-203.
*29.*	Moon, K. H.(2017). “The Role of Reasoning and Intuition in Moral Decision-making,” Journal of Moral ε Ethics Education, 4, pp.85-115.
*30.*	Pae, S.J. and J. T. Kim(2018), “Can the Ethics of Members of Society Be Taught in Accounting,” Korean Accounting Journal, 27(5), pp.135-166.
*31.*	Reidenbach, R. E. and D. P. Robin(1990), “Toward the Development of a Multidimensional Scale for Improving Evaluations of Business Ethics,” Journal of Business Ethics, 9, pp.639-653.
*32.*	Rest, J. R.(1986). Moral Development: Advances in Research and Theory (Y. L. Moon et al. Trans.), Seoul, Hakjisa, 2008,(original work published in 1986, New York, Praeger).
*33.*	Rho, J. H. and G. S. Bae(2004), “An Analysis of Accounting Failures and Recommendations for Improvement: Business, Accounting, Audit, and Regulatory Environment,” Korean Accounting Journal, 13(2), pp.155-180.
*34.*	Sims, R. R. and S. J. Sims(1991), “Increasing Applied Business Ethics Courses in Business School Curricula,” Journal of Business Ethics, 19, pp.211-219.
*35.*	Singhapakdi, A., S. J. Vitell, and G. R. Franke (1999), “Antecedents, Consequences, and Mediating Effects of Perceived Moral Intensity and Personal Moral Philosophies,” Journal of the Academy of Marketing Science, 27(1), pp.19-36.
*36.*	Smith, L. M., K. T. Smith, and E. V. Mulig(2005), “Application and Assessment of an Ethics Presentation for Accounting and Business Classes,” Journal of Business Ethics, 61(2), pp.153-164.
*37.*	Stajkovic, A. and F. Luthans(1997), “Business Ethics across Cultures: A Social Cognitive Model,” Journal of World Business, 32(1), pp.17-34.
*38.*	Treviño, L. K.(1986), “Ethical Decision Making in Organizations: A Person-Situation Interactionist Model,” Academy of Management Review, 11(3), pp.601-617.
*39.*	Treviño, L. K., G. R. Weaver, and S. J. Reynolds (2006), “Behavioral Ethics in Organizations: A Review,” Journal of Management, 32(6), pp.951-990.
*40.*	Valentine, S. R., and C. R. Bateman(2011), “The Impact of Ethical Ideologies, Moral Intensity, and Social Context on Sales-based Ethical Reasoning,” Journal of Business Ethics, 102(1), pp.155-168.
*41.*	Walker, K. L., and N. Moran(2019), “Consumer Information for Data-driven Decision Making: Teaching Socially Responsible Use of Data,” Journal of Marketing Education, 41(2), pp.109-126.
*42.*	Weber, J. and S. M. Glyptis(2000), “Measuring the Impact of a Business Ethics Course and Community Service Experience on Students’ Values and Opinions,” Teaching Business Ethics, 4(4), pp.341-358.
*43.*	Wells, J. T.(2010), Principles of Fraud Examination, 3rd, Hoboken, N.J., John Wiley & Sons.

∙ The author Jae Mee Yoo is an associate professor of marketing at the School of Business Administration at Cheongju University. Her research interests include CSR, ESG and consumers’ responsive behavior to marketing activities.

∙ The author Mi Lim Chon is an associate professor of accounting at the School of Business Administration at Cheongju University. Her research interests include CSR, ESG and disclosure.

∙ The author Woojae Choi is an associate professor of Organization & Human Resource Management at the School of Business Administration at Cheongju University. His research interests include leadership, positive organization scholarship, ESG, and workplace learning and training.