Although auditors engage in considerable social interaction (Gibbins & Mason, 1988; Solomon, 1987), little is known about how social interaction influences an auditor's moral reasoning process. In order to address this gap, this study used an experiment to examine the effect of social influence on 288 auditors' moral reasoning on realistic moral dilemmas. The results of this study indicate that social interaction influences the moral reasoning of auditors. Auditors' level of prescriptive reasoning appears to increase after engaging in discussion of a realistic moral dilemma, particularly for those which discuss dilemmas with others at high levels of moral development, while auditors' level of deliberative reasoning appears to decrease after engaging in discussion of a realistic moral dilemma. At a practical level, these findings suggest that auditors should be encouraged to prescriptively discuss moral dilemmas with others of high levels of moral development as this tends to result in the use of more principled moral reasoning. In contrast, auditors should avoid deliberative discussion of moral dilemmas, as this tends to result in the use of less principled moral reasoning than would be used in the absence of discussion.

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This study analyzes the concept of auditor independence and develops a theoretical model for examining an auditor's independence and the methods that can be used to assess, instill and maintain independence. In addition, this research reports the results of an empirical test of a portion of the model. In this work, independence is described as a multifaceted concept that includes both independence in appearance and independence in fact. By incorporating literatures from economics and sociology, relationships between these two forms of independence are developed to show that the observable structures and behaviors of the profession (independence in appearance) form the basis for implying the level of an individual auditor's independence (independence in fact). In this context, independence is operationally defined as: an auditor's perceived right to make audit judgments free from client and firm influences. The model further suggests that the observable structures of the profession form the socialization contexts for an individual's professional development. A survey of newly hired employees from five national accounting firms was conducted to examine the multidimensional aspects of auditor independence and the link between educational socialization processes and professional development. The results provide some support for the theoretical model and provide a basis for refining the linkages between educational socialization and professional development.

by Kan Hee Anthony Tyen. / Thesis (Ph.D.)--Chinese University of Hong Kong, 1997. / Includes bibliographical references (p. 367-394). / Electronic reproduction. Hong Kong : Chinese University of Hong Kong, [2012] System requirements: Adobe Acrobat Reader. Available via World Wide Web. / Mode of access: World Wide Web. / Abstracts in English and Chinese.

This dissertation is a descriptive, exploratory examination of professional commitment, organizational commitment, and conflict between those commitments in the internal audit profession. That conflict has been suggested in prior studies as the source of dysfunctional outcomes such as increased role stress, high turnover, decreased job satisfaction, and the exercise of improper judgment leading to audit failures. The descriptive aspect of this study deals with the development of a more comprehensive structural model of the factors and relationships involved in commitment and conflict than has been developed by previous research dealing with accountants. The exploratory aspect deals with the testing and refinement of the developed model utilizing the internal audit profession as the field of examination. The model developed in this study is derived from the synthesis of factors suggested by role theory, the concept of side bets, the cosmopolitan-local construct, and the concept of commitment as a process. This research utilizes a questionnaire administered to 205 practicing internal auditors in order to test 30 hypothesized relationships. Path analysis is used to determine the significant direct relationships between variables with a process of theory trimming being conducted in order to produce more parsimonious structural models. Indirect relationships between significant variables are identified and their redundant or suppressive nature determined. Explanations of these suppressive or redundant relationships are provided based on the theoretical considerations identified above. Such a determination and explanation of the redundant and suppressive indirect relationships involved in the commitment-conflict relationship has not been accomplished in earlier studies of the subject. Although the procedures used here do not support causal conclusions, the findings of this study indirectly provide evidence that conflict between the two commitments in the internal audit area is not to be considered inherent. The findings also suggest a possible undesirable relationship between organizational formalization and professional commitment.

by Tsui Lam Sin Lai, Judy. / Includes questionaire in Chinese. / Thesis (Ph.D.)--Chinese University of Hong Kong, 1994. / Includes bibliographical references (leaves 248-267). / ABSTRACT --- p.i / TABLE OF CONTENTS --- p.vi / LIST OF FIGURES --- p.xi / LIST OF TABLES --- p.xiii / ACKNOWLEDGEMENTS --- p.xv / CHAPTER / Chapter I. --- INTRODUCTION AND BACKGROUND / Chapter 1.1 --- Introduction --- p.1 / Chapter 1.2 --- Background --- p.8 / Chapter 1.2.1 --- Meaning and Concept of Ethics --- p.8 / Chapter 1.2.2 --- Approaches to Understand Ethical Behaviour in Accounting --- p.10 / Chapter 1.2.3 --- Tenets of Ethical Conduct --- p.19 / Chapter 1.2.4 --- Concept of Independence --- p.21 / Chapter 1.2.5 --- Auditor-Client Conflict --- p.23 / Chapter 1.3 --- Motivation for the Study --- p.26 / Chapter 1.4 --- Objective of the Study --- p.31 / Chapter 1.5 --- Outline of the Study --- p.32 / Chapter 1.6 --- Summary --- p.34 / Chapter II. --- LITERATURE REVIEW / Chapter 2.1 --- Introduction --- p.36 / Chapter 2.2 --- Accounting Ethics Literature --- p.37 / Chapter 2.2.1 --- Situational Variables in Third Party Perceptions --- p.40 / Chapter 2.2.2 --- Individual Differences --- p.43 / Chapter 2.2.3 --- Auditor Independence in Fact --- p.45 / Chapter 2.2.4 --- Cognitive Process --- p.47 / Chapter 2.3 --- Business and Marketing Ethics Literature --- p.52 / Chapter 2.4 --- General Decision Making Model --- p.59 / Chapter 2.5 --- Theoretical Model for Auditors' Ethical Decision Making --- p.63 / Chapter 2.5.1 --- Research Questions --- p.67 / Chapter 2.6 --- Summary --- p.68 / Chapter III. --- COGNITIVE MORAL DEVELOPMENT THEORY / Chapter 3.1 --- Introduction --- p.70 / Chapter 3.2 --- Cognitive Process --- p.71 / Chapter 3.3 --- Kohlberg's Theory of Cognitive Moral Development --- p.77 / Chapter 3.4 --- Criticisms of Kohlberg's Cognitive Moral Development Theory --- p.89 / Chapter 3.5 --- Antecedents of Moral Development --- p.92 / Chapter 3.6 --- Moral Reasoning Levels of Professional Accountants --- p.94 / Chapter 3.7 --- Summary --- p.101 / Chapter IV. --- HYPOTHESES DEVELOPMENT / Chapter 4.1 --- Introduction --- p.103 / Chapter 4.2 --- Decision Making Task --- p.104 / Chapter 4.3 --- Moral Reasoning and Ethical Behaviour --- p.108 / Chapter 4.4 --- Hypotheses --- p.114 / Chapter 4.4.1 --- Moral Reasoning --- p.117 / Chapter 4.4.2 --- Individual Differences --- p.119 / Chapter 4.4.2.1 --- Locus of Control --- p.121 / Chapter 4.4.2.2 --- Locus of Control and Moral Reasoning --- p.124 / Chapter 4.4.2.3 --- Cognitive Style --- p.126 / Chapter 4.4.2.4 --- Cognitive Style and Moral Reasoning --- p.129 / Chapter 4.4.3 --- Contextual Factor --- p.130 / Chapter 4.4.3.1 --- Size of Audit Fees --- p.132 / Chapter 4.4.3.2 --- Size of Audit Fees and Moral Reasoning --- p.135 / Chapter 4.4.3.3 --- Size of Audit Fees and Individual Differences --- p.137 / Chapter 4.4.3.4 --- "Moral Reasoning, Individual Differences and Size of Audit Fees" --- p.140 / Chapter 4.5 --- Summary --- p.143 / Chapter V. --- RESEARCH METHODOLOGY / Chapter 5.1 --- Introduction --- p.144 / Chapter 5.2 --- Field Experiment --- p.145 / Chapter 5.3 --- Measurement of Variables --- p.148 / Chapter 5.3.1 --- Dependent Variable --- p.150 / Chapter 5.3.2 --- Moral Reasoning --- p.151 / Chapter 5.3.3 --- Locus of Control --- p.158 / Chapter 5.3.4 --- Cognitive Style --- p.158 / Chapter 5.3.5 --- Size of Audit Fees --- p.159 / Chapter 5.4 --- Subjects and Sample Size --- p.160 / Chapter 5.5 --- Procedures --- p.170 / Chapter 5.6 --- Research Instruments --- p.172 / Chapter 5.7 --- Scoring Methods of Research Instruments --- p.175 / Chapter 5.8 --- Summary --- p.175 / Chapter VI. --- DATA ANALYSIS AND RESULTS / Chapter 6.1 --- Introduction --- p.177 / Chapter 6.2 --- Data Analysis Techniques --- p.178 / Chapter 6.3 --- Limitations of the Multiplicative Model --- p.182 / Chapter 6.4 --- Descriptive Statistics of Variables --- p.184 / Chapter 6.5 --- Validity and Internal Reliability of Variables --- p.184 / Chapter 6.6 --- Defining Issues Test: Internal Checks on Subject Reliability --- p.185 / Chapter 6.7 --- Results --- p.187 / Chapter 6.8 --- Summary --- p.200 / Chapter VII. --- DISCUSSION OF RESULTS / Chapter 7.1 --- Introduction --- p.201 / Chapter 7.2 --- Hypotheses with Significant Results --- p.202 / Chapter 7.2.1 --- Test of Null Hypothesis 2 --- p.202 / Chapter 7.2.2 --- Test of Null Hypothesis3 --- p.205 / Chapter 7.2.3 --- Test of Null Hypothesis 8 --- p.216 / Chapter 7.3 --- Hypotheses with Insignificant Results --- p.225 / Chapter 7.4 --- Summary --- p.234 / Chapter VIII. --- CONCLUSION / Chapter 8.1 --- Introduction --- p.236 / Chapter 8.2 --- "Summary of Objective, Research Questions and Hypotheses" --- p.236 / Chapter 8.3 --- Summary of Findings --- p.238 / Chapter 8.4 --- Contributions --- p.240 / Chapter 8.5 --- Implications --- p.241 / Chapter 8.6 --- Limitations --- p.242 / Chapter 8.7 --- Directions for Future Research --- p.244 / Chapter 8.8 --- Summary --- p.247 / BIBLIOGRAPHY --- p.248 / APPENDICES / Appendix I Normative Ethical Theories --- p.268 / Appendix II Fundamental Principles of Ethical Conduct --- p.272 / Appendix III Theoretical Frameworks on Ethical Behaviour --- p.275 / Figure 1 A Contingency Model of Ethical Decision Making in a Marketing Organisation --- p.280 / Figure 2 General Theory of Marketing Ethics --- p.281 / Figure 3 A Behavioural Model of Ethical/Unethical Decision Making --- p.282 / Figure 4 A Model of Ethical Decision Behaviour --- p.283 / Figure 5 Three Types of Causal Relations --- p.284 / Figure 6 Cognitive-Contingency Model for the Study of Ethics in Accounting --- p.285 / Appendix IV The Six Equilibrium Stages of Ethical Cognition --- p.286 / Appendix V Auditors' Decision Making Questionnaire --- p.287 / Appendix VI Debriefing Questionnaire --- p.306 / Appendix VII Social Opinion Survey (Chinese Version) --- p.307 / Appendix VIII Nature of Audit Conflict Cases as Reported by Subjects --- p.312 / Appendix IX A Summary of Subjects' Perceptions of the Purpose of the Experiment --- p.313 / Appendix X Use of Partial Derivatives for Data Analysis --- p.314

In recent years, considerable interest has been stimulated concerning potential conflicts of interest between a company's management and their independent auditors. Many researchers examined the association between corporations who changed their present auditors, and factors such as auditor's opinion on the financial statements, management changes, mergers, financial distress, etc. Some of these research efforts resulted in findings that were inconsistent with each other. The current research was therefore undertaken with the objective of developing a theoretical model of auditor change process and to explain the justification for considering certain specific factors that may be present in an auditor-client relationship. The research design and the methodology for analyses were developed on the basis of the theory on power conflicts found in political science literature and by the use of Wrong's power model on authority relationship. Sources of power such as the size of an audit firm, size of a corporation, the stock exchange membership, the ability of an auditor to qualify the opinion on the financial statements, the ability of the management of a corporation to terminate the audit contract following the issue of a qualified opinion, and change of a corporation's CEO were identified and converted into independent variables. Data were collected from secondary sources on a sample of 200 corporations, 100 companies that had changed their audit firm at least once during the period 1983-85, and 100 corporations that did not change their audit firm during this period. The resulting data were analyzed using the MDS-ALSCAL procedure and logit regression with maximum likelihood estimators. The findings of this research support the power model and its relevancy to the study of auditor-client relationship. The variables, client size, stock exchange membership, and audit firm size were found to have a significant association with corporations who changed their audit firms. However, the variable, change of CEO, was not found to be a significant cause of audit firm changes.