Auditors' virtue comprises those qualities of character that manifest the ideals of the audit community ), and are instrumental in ensuring that auditors' professional judgment is exercised according to a high moral standard ). Nevertheless, the lack of valid and reliable quantitative measures of auditors' virtue impedes research that furthers our understanding of how best to promote virtue in the audit community. To address this gap, we develop two measures of auditors' virtue. We report the results of the validity and (...) reliability of the scales. In addition, we use the findings from the administration of these scales to professional accountants to refine and validate the theoretical characterization of virtues developed by Pincoffs and Libby and Thorne. In so doing, this study provides a foundation by which future audit research can study ways to ensure that auditors' virtue is promoted throughout the audit community. (shrink)

In this paper, we develop a typology of auditors’ virtues through in-depth interviews with nine exemplars of the audit community.We compare this typology with prescribed auditors’ virtues as represented in the applicable Code of Professional Conduct. Ourcomparison shows that the Code places a primary emphasis on mandatory virtues including the virtues of “independent,” “objective,”and “principled.” While the non-mandatory virtues, which involve “going beyond the minimum” and “putting the public interest foremost,” were identified by our exemplars as essential to the auditor’s (...) role, they received little or no emphasis in the Rules of Professional Conduct. We find this particularly alarming, given that the exemplars interviewed for this study viewed these virtues are essential to the auditors’ role. If the audit profession wishes to uphold public confidence by encouraging the possession of non-mandatory auditors’ virtues, our research suggests that non-mandatory auditors’ virtues should be explicitly described and included in rules of professional conduct. (shrink)

Abstract:There is good reason to take a virtue-based approach to business ethics. Moral principles are fairly useful in assessing actions, but understanding how moral people behave and how they become moral requires reference to virtues, some of which are important in business. We must go beyond virtues and refer to character, of which virtues are components, to grasp the relationship between moral assessment and psychological explanation. Virtues and other character traits are closely related to (in technical terms, they supervene on) (...) personality traits postulated by personality psychologists. They may therefore be featured in respectable psychological explanations. But good character fits no familiar psychological pattern. A person of good character is sufficiently self-aware and rational that his or her virtues are not accompanied by the vices that psychologists find usually associated with them. A course in business ethics can help develop this self-awareness, which a good life in business requires. (shrink)

For forty years, successive editions of Ethical Theory and Business have helped to define the field of business ethics. The 10th edition reflects the current, multidisciplinary nature of the field by explicitly embracing a variety of perspectives on business ethics, including philosophy, management, and legal studies. Chapters integrate theoretical readings, case studies, and summaries of key legal cases to guide students to a rich understanding of business ethics, corporate responsibility, and sustainability. The 10th edition has been entirely updated, ensuring that (...) students are exposed to key ethical questions in the current business environment. New chapters cover the ethics of IT, ethical markets, and ethical management and leadership. Coverage includes climate change, sustainability, international business ethics, sexual harassment, diversity, and LGBTQ discrimination. New case studies draw students directly into recent business ethics controversies, such as sexual harassment at Fox News, consumer fraud at Wells Fargo, and business practices at Uber. (shrink)

The first edition was awarded the '2005 Textbook Award of the Association of University Professors of Management (Verband der Hochschullehrer fur ...

This thoughtful new abridgment is enriched by the brilliant commentary which accompanies it. In it, Laurence Dickey argues that the _Wealth of Nations_ contains--and conceals--a great deal of how Smith actually thought a commercial society works. Guided by his conviction that the so-called Adam Smith Problem--the relationship between ethics and economics in Smith's thinking--is a core element in the argument of the work itself, Dickey's commentary focuses on the devices Smith uses to ground his economics in broadly ethical and social (...) categories. An unparalleled guide to an often difficult and perplexing work. (shrink)

Auditors’ virtue comprises those qualities of character that manifest the ideals of the audit community (c.f., Maclntyre, 1984, After Virtue. (University of Notre Dame Press, Notre Dame)), and are instrumental in ensuring that auditors’ professional judgment is exercised according to a high moral standard (Thorne, 1998, Research on Accounting Ethics. (JAI Press, Greenwich, CT)). Nevertheless, the lack of valid and reliable quantitative measures of auditors’ virtue impedes research that furthers our understanding of how best to promote virtue in the audit (...) community. To address this gap, we develop two measures of auditors’ virtue. We report the results of the validity and reliability of the scales. In addition, we use the findings from the administration of these scales to professional accountants to refine and validate the theoretical characterization of virtues developed by Pincoffs (1986, Quandaries and Virtues. University Press of Kansas, Lawrence, KS) and Libby and Thorne (2004, Business Ethics Quarterly). In so doing, this study provides a foundation by which future audit research can study ways to ensure that auditors’ virtue is promoted throughout the audit community. (shrink)

Prior researchers have studied individual components of a theoretical decision-making model. This paper presents the results of a more complete study of the model components and presents limited support of theory. The study examines the relative importance of regulatory, organizational, and personal constructs on an individual''s ethical sensitivity. Auditors from the major international accounting firms, located in two southeastern cities, are surveyed. Structural equation modeling is used to allow for the simultaneous evaluation of the three constructs of interest. The results (...) indicate that the regulatory and organizational constructs are negatively correlated with the personal experience construct. The three constructs are not significant causal factors on ethical sensitivity. This result may be due to the manner in which ethical sensitivity is typically measured or may indicate that the complexity of the ethical decision-making process is not fully captured in the theoretical models. Thus, the models suggested in the prior literature and the results presented in prior studies of the individual components may need to be reconsidered. (shrink)

Ethics in accounting and ethical education have seen an increase in interest in the last decade. However, despite the renewed interest some important shortcomings persist. Generally, rules, principles, values and virtues are presented in a fragmented fashion. In addition, only a few authors consider the role of the accountants character in presenting relevant and truthful information in financial reporting and the importance of practical reasoning in accounting. This article holds that rules, values and virtues are interconnected. This provides a sound (...) approach to ethics in accounting, in which character and practical reasoning are crucial. Consequently, ethical education in accounting has to simultaneously include the knowledge of proper rules and principles and their correct application; values (understood as moral goods) and virtues, whose acquisition, in the view of the author, should be encouraged. (shrink)

The public accounting industry’s voluntary code of conduct in the United States is the American Institute of CPA’s Code of Professional Conduct. Based on our analysis, we conclude that the accounting industry’s current code is limited in its ability to serve the public interest in three respects. Specifically, the code is input-based, requires no third-party attestation of compliance with the code, and contains no public reporting process of code compliance/noncompliance at the accounting firm level. We propose that the accounting profession (...) should reorient its largely input-based Code of Professional Conduct to include output-based performance measurements. We also conclude that third-party attestation of compliance with the profession’s code would help to promote compliance. Finally, we maintain that the accounting industry should initiate a public reporting process at the individual accounting firm level. Such a requirement would add a degree of public accountability as to whether a firm complies or fails to comply with the industry’s voluntary code of conduct. (shrink)

This article explores differences in the ways in which utilitarian, deontological and virtue/aretic ethics treat of act, outcome, and agent. I argue that virtue ethics offers important and distinctive insights into business practice, insights overlooked by utilitarian and deontological ethics.

This paper compares the moral reasoning of 363 auditors from Canada and the United States. We investigate whether national institutional context is associated with differences in auditors'' moral reasoning by examining three components of auditors'' moral decision process: (1) moral development, which describes cognitive moral capability, (2) prescriptive reasoning of how a realistic accounting dilemma ought to be resolved and, (3) deliberative reasoning of how a realistic accounting dilemma will be resolved. Not surprisingly, it appears that institutional factors are more (...) likely to be associated with auditors'' deliberative reasoning than their prescriptive reasoning in both countries. Additionally, our findings suggest that the national institutional context found in the United States, which has a tougher regulatory and more litigious environment, appears to better encourage auditors to deliberate according to what they perceive is "the ideal" judgment as compared to the Canadian context. We then discuss the implications of these findings for regulators and for ethics research. (shrink)

In this paper, we develop a typology of auditors’ virtues through in-depth interviews with nine exemplars of the audit community.We compare this typology with prescribed auditors’ virtues as represented in the applicable Code of Professional Conduct. Ourcomparison shows that the Code places a primary emphasis on mandatory virtues including the virtues of “independent,” “objective,”and “principled.” While the non-mandatory virtues, which involve “going beyond the minimum” and “putting the public interest foremost,” were identified by our exemplars as essential to the auditor’s (...) role, they received little or no emphasis in the Rules of Professional Conduct. We find this particularly alarming, given that the exemplars interviewed for this study viewed these virtues are essential to the auditors’ role. If the audit profession wishes to uphold public confidence by encouraging the possession of non-mandatory auditors’ virtues, our research suggests that non-mandatory auditors’ virtues should be explicitly described and included in rules of professional conduct. (shrink)

Finance Ethics is not just a moral critique of the finance paradigm, arguing that self-interested profit making must be constrained by ethics. Rather, it is a critique from within that paradigm, in which truth becomes a rational mechanism to enforce contracts, and virtuous behavior is shown to make the most business sense.

The International Federation of Accountants (IFAC) has recently issued a revised "Code of Ethics for Professional Accountants" (IFAC Code). As a requirement for membership in IFAC, a national accounting organization must either adopt the IFAC Code or adopt a code of conduct that is not "less stringent" than the IFAC Code. In this paper, we examine the extent to which 158 national accounting organizations have adopted the revised IFAC Code as their own. Our results indicate that 80 of our sample (...) organizations have adopted the IFAC Code (sometimes with minor modifications), while the remaining 78 opted not to utilize the model IFAC Code. We then test the hypothesis that national accounting organizations in lower income economies would be less likely to adopt the IFAC Code than those in high income economies. Our results do not support the hypothesis. We argue that one potential reason for such a finding is that adopting the IFAC Code may be a cost effective means of adopting a code of ethics for organizations in lower income economies. (shrink)

The public accounting industry's voluntary code of conduct in the United States is the American Institute of CPA's Code of Professional Conduct. Based on our analysis, we conclude that the accounting industry's current code is limited in its ability to serve the public interest in three respects. Specifically, the code is input-based, requires no third-party attestation of compliance with the code, and contains no public reporting process of code compliance/noncompliance at the accounting firm level. We propose that the accounting profession (...) should reorient its largely input-based Code of Professional Conduct to include output-based performance measurements. We also conclude that third-party attestation of compliance with the profession's code would help to promote compliance. Finally, we maintain that the accounting industry should initiate a public reporting process at the individual accounting firm level. Such a requirement would add a degree of public accountability as to whether a firm complies or fails to comply with the industry's voluntary code of conduct. (shrink)

The main purpose of this paper is to defend traditional ethical theory (utilitarianism and deontology) for its application in business against a more recent model consisting of utility, rights, and justice. This is done in three parts: First, we provide a conceptual argument for the superiority of the traditional model; second, we demonstrate these points through an examination of three short cases; and third, we argue for the capability of the traditional model to account for universals and particulars in ethics.

In this paper we look at business ethics from a deontological perspective. We address the theory of ethical decision-making and deontological ethics for business executives and explore the concept of “moral duty” as transcending mere gain and profit maximization. Two real-world cases that focus on accounting fraud as the ethical conception. Through these cases, we show that while accounting fraud – from a consequentialist perspective – may appear to provide a quick solution to a pressing problem, longer term effects of (...) fraud and misconduct make ethical implications more apparent. Widely used compensation schemes also may have the tendency to fuel unethical behavior. We argue that an ethical reinvigoration of the business world can only be accomplished by encouraging the business realm to impose upon itself some measure of self-regulating along the lines of deontological ethics. Principles of deontology should guide executive decision-making particularly when executives are tempted to operate outside of codified legislation or are bound to act under judicial-free conditions. (shrink)