The Effect of Ethical Ideology on Earnings Management Practices

Herman Yosef Sri Widodo

Abstract


Earnings management is taking advantage of the flexibility in the choice of accounting treatment to signal the manager’s private information on future cash flows (Sankar and Subramanyam, 2001). Earnings management can be defined as the practice of using tricks to misrepresent or reduce transparency of the financial reports (Miller and Bahnson, 2002). Ethical ideology consists of the degree of relativism (use of universal moral rules) and idealism (belief that good can come of all situations) exhibited by individuals when they make an ethical decision (Forsyt, 1981). The aim of this research is to examine the influence of ethical ideology on earnings management practices. This study tested hypotheses that Ethical Ideology can influence negatively to the intention of earnings management. For this purpose, the data are collected from 121 students who have already passed Auditing and Business Ethics courses in Accounting Study Program, The Faculty of Business and Economics, Universitas Atma Jaya Yogyakarta. The data was analysed by using SPSS16 version. The result of this research shows that ethical ideology has negative effect on the intention of earnings management

Keywords: earnings management, ethical ideology


Full Text:

PDF

References


Ashman, I. & Diana, W., 2006. The Ethics of organizational commitment Business Ethics: A European Review, 15(2) pp.142-153.

Belkaoui, A. 2004. Accounting Theory (5th ed.) Singapore: Thompson Learning.

Brunc, W.J. & Merchant, K.A. 1990. The dangerous morality of managing earnings.

Management Accounting, 72(2), pp. 22-25.

Clikeman, P., Greiger, M. & O’Connell, B. 2001. Student perceptions of earnings management: the effects of national origin and gender. Teaching Business Ethics, 5(4), pp. 389-410.

De Connick J.B & Lewis W.F. 1997. The Influence of Deontological and Teleological Consideration and Ethical Climate on Sales Manager’s Intention to reward or Punish Salesforce Behavior. Journal of Business Ethics,16 (5), pp. 497-506.

De George, R.T. 1993. Competing with Integrity in International Business. New York. Oxford University Press.

Richard T. 1995. Business Ethics 4th Edition. New Jersey. Prentice Hall Inc.

Elias, R. 2004. The impact of corporate ethical values on perceptions of earnings management. Managerial Accounting Journal, 19(1), pp. 84-98.

Fischer, M. & Rosenzweig, K. 1995. Attitudes of students and accounting practitioners concerning the ethical acceptability of earnings management. Journal of Business Ethics, 14(6), pp. 433-444.

Forsyth D.R. 1992. Judging the Morality of Business Practices: The Influence of Personal Moral Philosophies. Journal of Business Ethics, 11(5), pp. 461-470.

Giacalone R.A, Fricker S. & J.W. Beard. 1995. The Impact of Ethical Ideology on Modifiers of Ethical Decisions and Suggested Punishment for Ethical Interaction. Journal of Business Ethics, 14(7), pp. 497 – 510.

Giacomino, D.E. & Akers, M. 2006. The ethics of managing short-term earnings: business managers and business students have few problems with earnings management practices. Journal of College Teaching & Learning, July, pp. 57-71.

Handayani, Sri R.R & Rachmadi A.D. 2009. Pengaruh Ukuran Perusahaan terhadap manajemen Laba. Jurnal Bisnis dan Akuntansi, 11(1).

Healy, P.M. & Wahlen, J.M. 1999. A review of the earnings management literature and its implications for standard setting. Accounting Horizons, 13(4), pp. 365-383.

Henle, C. R. Giacalone & C. Jurkiewicz. 2005. The Role of Ethical Ideology in Workplace Deviance. Journal of Business Ethics, 56, pp. 219-230.

Jensen, M.C. & William H.M. 1976. Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, October, 3(4), pp. 305-360.

Kaplan, S.E. 2001. Ethically related judgments by observers of earnings management. Journal of Business Ethics, 32, pp. 285-298.

Kohlberg, L.1984. The Psychology of Moral Development. San Fransisco: Harper & Row Publisher.

Kusuma, H. 2006. Dampak Manajemen Laba terhadap Relevansi Informasi Akuntansi: Bukti Empiris dari Indonesia. Jurnal Akuntansi dan Keuangan, 8(1), pp.1-12. Retrieved from http://203.189.120.190/ejournal/index.php/aku/article/download/16578/16570, June 26, 2016.

Kusuma, L.S.A. & Paskah Ika Nugroho 2013. Analisis Perataan Laba pada Perusahaan Manufaktur. Jurnal Manajemen, 12(2), May.

Pradipta, Arya. 2011. Analisis Pengaruh Mekanisme Corporate Governance terhadap Manajemen Laba. Jurnal Bisnis dan Akuntansi, 13(2), Agustus, pp. 93-106.

Velasquez, M.G. 2014. Business Ethics: Concepts and Cases. New Jersey: Pearson Prentice-Hall.

Widodo, Sri, 2015. Pengaruh Komitmen Organisasional terhadap Senjangan Anggaran dengan Ideologi Etis sebagai variabel Pemoderasi. Kinerja, 19(2), September.

Wolk, H. I., Michael G.T. & James L.D. 2001. Accounting Theory: A Conceptual and Institutional Approach 5th Edition. Cincinnati, Ohio: South Western College Publishing.




DOI: https://doi.org/10.24002/kinerja.v24i1.3228

Refbacks

  • There are currently no refbacks.