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Selection-Socialization

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Some recent highly visible business scandals and governance failures involving relatively large companies such as Enron and its auditors, Arthur Andersen have given rise to concerns about accountants’ ethical reasoning. The research is based on the premise that accountants have a weak ethical reasoning in light of these scandals. The purpose of the research is to explore, using hypothesis, whether selection-socialization exists in accounting firms and its effect on accountant’s level of ethical reasoning. The research also investigates whether the selection of women has resulted in ethical reasoning that is similar to that of their male counterparts. This is important given the large number of women that have entered the accounting profession over the past few years. Based on the results reported in the cognitive and ethical reasoning literature the research explores two hypotheses as follows: 1. There is no significant difference between the P-scores of male and female staff accountants. 2. The dominant cognitive style among staff accountants is ST.
The study employs the Myers/Briggs Type Indicator (MBTI), a well-known measure for assessing cognitive styles and the Defining Issues Test (DIT) for assessing ethical reasoning of newly recruited auditors from Big-Five firms. Based on MBTI adapted from Fisher and Ott and descriptions of the cognitive styles, the authors deduce a third hypothesis that order for P-scores is SF, ST, NF and NT (lowest to highest). The research uses a sample of 90 consisting of 47 female and 43 male newly recruited auditors. Although not randomly selected, the sample is assumed to be representative of the population of new auditors in Big-Five accounting firms. To test the hypothesis that there is no significant difference between the P-scores of male and female staff accountants, a two-sample t-test is performed on the data. The results of the t-test (p-scores of 44.8 for women and 43.5 for men) are consistent with the expectation stated in the hypothesis that accounting firm select male and female of similar reasoning into the profession. However, the finding is contrary to the widely held belief that female generally possess higher levels of p-scores than men. As aforementioned, the research used Myers/Briggs Type Indicator (MBTI) to assess cognitive styles. The results reveal that 46% of the subjects are ST compared to the national average of between 2.7 – 15.45%. This confirms the prediction of the hypothesis that the Sensing/Thinking style is dominant among staff accountants. The Sensing/Thinking style is also associated with lower levels of ethical reasoning (as measured by the DIT) than other cognitive styles namely SF, ST, NF and NT. The findings suggest that the selection of accountants is biased in favor of individuals possessing certain characteristics. As the article points out, older and more experienced audit managers possess lower levels of ethical reasoning than younger and less experienced audit seniors. It appears therefore that managers’ selection decisions are biased in favor of people with similar cognitive style and ethical reasoning as themselves. In so doing, they are promoting a culture of low ethical reasoning. As aforementioned, studies in accounting indicate that older and more experienced audit managers have lower levels of ethical reasoning. While this may be true, it seems to go against Kohlberg's moral development theory. According to Kohlberg, the development of ethical-reasoning abilities can be divided into three major levels (pre-conventional level, conventional level and post-conventional) each subdivided into two yielding six progressive stages. Individuals progress consecutively from one stage to the next throughout life and the higher the ethical stage presumably the more the ability to resolve an ethical dilemma. That being said, older and experienced managers in accounting firms should have a higher ethical reasoning. Since this is not the case, I am inclined to conclude that ethical culture of the accounting firm stymies an individual's development to higher levels of ethical reasoning. While the finding that accountants have a weak ethical reasoning may be disturbing to some people, it is important to note that accountants perform a very specialized role that may be better served by a Sensing/Thinking types of people. Accounting involves recording, classifying, summarizing and analyzing of accounts. These functions seem to correspond very well with the characteristics of Sensing/Thinking cognitive style person. However, I do not think accountants have certain characteristics as indicated in the article. The study finds that new entrants into the accounting profession come with ST cognitive styles as compared to the broader population. While this seem to suggest that the selection is biased for a specific type of people it could also imply that people choose career paths based on their personality and that if you have a sensing/thinking type personality you will most likely choose accounting as a career. I believe people enter the accounting profession for varied reasons (financial needs, working environment etc) regardless of their personality. As such, accountants come in all shapes and forms – introvert, extrovert personalities etc. Given ongoing crisis accounting arena following the scandals involving large accounting firms, the need to improve the ethical reasoning of accountants can not be over-emphasized. Accountants particularly the ST types need to be trained in ethical reasoning to enable them to act appropriately when faced with ethical dilemmas. Ethics is a critical aspect of what accountants do, and their work requires the highest levels of ethical reasoning. Therefore, a deficiency of ethical reasoning among accountants as revealed in the study would do more harm then good to the profession and all those they serve. The article mentions that our legal system holds accountants to the highest standard of jurisdiction rather than ethical recognition. That being said, I think it is possible that even high ethical reasoning accountants may fail to behave ethically due to system failure rather than personal deficiency. Nevertheless, the need to enhance accountants’ abilities in ethical reasoning in a manner that improves the public trust cannot be overlooked (Abbolmohammadi, Read & Scarbrough, 2003).

Reference

Abbolmohammadi, M, Read, W. & Scarbrough, D. (2003). Does selection-socialization help to explain accountants’ weak ethical reasoning? Journal of Business Ethics, 42, 71-81.

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