A Predictive Classification Approach to Examining Components of Ethical and Transformational Leadership Contributing to Leader Effectiveness in the Accounting Profession

Abstract

Ethical leadership is of great interest in the accounting profession. After numerous ethical and moral leadership failures over the last two decades, where accounting professionals played a significant role in the fraudulent behaviors that impacted individuals, businesses, and the economy as a whole, the profession has renewed its focus on promoting ethical behavior. To date, research contributing to improving ethical behavior in the accounting profession has been minimal. A plethora of research has identified the deficiency of ethical reasoning and conduct in accounting students and professionals but has provided minimal recommendations on how to improve the status quo. Earlier studies have also found that values based, ethical and transformational leadership behaviors contribute to leader effectiveness in the accounting and business professions. What has not been studied or identified are the specific ethical and transformational leadership behaviors that should be sought or developed in professionals that would improve the ethical conduct and effectiveness of accounting leaders. This study seeks to address the gap in the literature by using neuro network analysis to understand the individual components of ethical and transformational leadership that result in leaders that are more effective in the profession. It concludes that in this study of 212 accounting professionals, ethical leaders that: (a) communicate openly, (b) are trustworthy, (c) consider and support their subordinates’ interest and (d) are altruistic, with a selfless concern for the well-being of others and transformational leaders that encourage their followers to think creatively are innovative are more effective leaders.