Determinants of the Attitudes of Portuguese Accounting Students and Professionals Towards Earnings Management
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Determinants of the Attitudes of Portuguese Accounting Students and Professionals Towards Earnings Management Tânia Menezes Montenegro 1
& Lúcia Lima Rodrigues
1
# Springer Nature B.V. 2020
Abstract
We revisit religiosity, gender, age, ethics education and experience as drivers of ethicality, while expanding prior research from Anglo-Saxon and Asiatic/Euro-Asiatic countries to a Latin European country, Portugal. We apply the Merchant (1989) instrument of attitudes towards earnings management, in a sample of Portuguese accounting students and alumni. We find no significant evidence of a positive association between religiosity and accountants’ judgments on earnings management. However, gender, age, education (and accounting ethics education) and experience are significant predictors of accountants’ judgments. The results are unchanged when we control for the intent (selfish benefit) of earnings management. Females, older individuals and alumni judge accounting earnings management more harshly than males, younger individuals, and students (who have not yet completed an accounting ethics course). A higher level of accounting work experience induces accountants to judge accounting earnings management as a less ethically questionable practice. This finding is theoretically relevant because it underscores the necessity of taking people’s constraints in the workplace into consideration when studying ethical behavior in business contexts. The results are also practically relevant, as they highlight the importance of a systematic ethics education throughout the accountant’s life. Keywords Business ethics . Accounting ethics . Earnings management . Religiosity . Portugal
* Tânia Menezes Montenegro [email protected] Lúcia Lima Rodrigues [email protected]
1
School of Economics and Management, NIPE - Centre for Research in Economics and Management, University of Minho, Campus de Gualtar, 4710-057 Braga, Portugal
T.M. Montenegro, L.L. Rodrigues
Introduction Ethical behavior and its boundaries are constantly being challenged in the contemporary business community. While accounting is rooted in moral conduct (Waymire 2014), the wave of international financial and accounting scandals has raised deep questions on moral values fragilities of business managers and accountants. These scandals stressed that regulations may not be sufficient, and that corporate governance needs to be guided by individual ethics and moral compasses (Pope 2005; Nga and Lum 2013; Triki et al. 2017). Portugal is not excluded from these scandals. For example, the Portuguese banking sector in the last decade suffered four large financial/accounting scandals.1 Several other recent scandals, involving private companies, banks, lawyers, and politicians also shook the country.2 In 2019, Portugal ranked 30th in the Corruption Perception Index among 180 countries, and 15th among the 31 countries of Western Europe.3 Given the ethics-unfriendly environment of Portugal, with many recent fraud and corruption scandals, the aim of this paper is to exa
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