Abstract
This study examines the effect of the interaction between cognitive moral development (pragmatic, accommodating, and autonomous) and an organizational situation (agency and stewardship) in business ethical decision making (earnings management and expropriation). This research employed a laboratory experiment design of full factorial factor 3x2 between-within subjects.There were 97 postgraduate students of Hasanuddin University that acted as participants. Data were analyzed by ANOVA and t-test. The results showed that the level of cognitive moral development is positively related to the degree of ethical decisions in accounting and expropriation. The higher the level of cognitive moral development, the more managers act ethically in decisions relating to accounting and expropriation. Meanwhile, the agency and stewardship situation have no effect on the differences in ethical decision making both in accounting and expropriation. Similarly, the exposure to an organizational situation has no impact on the relationship between levels of cognitive moral development and ethical decision making.The assumption stating that cognitive moral development of each participant has been an anchor and not easily changed to the different or the opposite situations is empirically proven.
Highlights
The relationship between moral value and ethical behavior is interesting to investigate when it involves external influences such as situational factors
A total of 104 students agreed to participate in this experiment representing 49% male students and 51% female students who are an average age of 29 years old. They are from accounting and finance bachelor degree background possessing an average of 6 years working experience as an accountant, auditor, manager, lecturer, trainer, or other
According to the result of the analysis and discussion above, it can be concluded that the level of Cognitive Moral Development (CMD) positively influences the ethical decision making in both accounting and expropriation
Summary
The relationship between moral value and ethical behavior is interesting to investigate when it involves external influences such as situational factors. The interaction between individual or personal values and situational factors in influencing ethical decision-making behavior had been investigated by Trevino and Youngblood (1990) in their study. They termed this interaction as bad apples in bad barrels. It is important to question the ethical orientation of an individual with a pragmatic opportunistic disposition in a sound condition as well as those with a high cognitive moral being in a contrary situation. A cognitive morality tends to be a personal character (fundamental belief) which cannot change despite being in a contrary condition
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