Ethical Decision Making by Management Accountants: An Empirical Examination of Obedience Theory


Fraudulent behavior involving major firms (Enron, WorldCom, etcetera) has resulted in significant losses to investors and others sparking renewed interest in business ethics research. These frauds may have been allowed to flourish because of the pressure that superiors leveled on their accountants.

This study reports the results of an experiment investigating if pressure from superiors (obedience pressure) affects the ethical choices of management accountants in a tax compliance situation dealing with the improper deduction of travel and entertainment expenses. The study also examined whether the materiality of the amount to be deducted improperly and the severity of the tax law violation affected ethical decision making. A sample of 168 members of the Institute of Management Accountants participated in the experiment.

The materiality of the tax deductions did not significantly affect the actions of the study participants. However, the severity of the tax law violation and pressure from superiors affected subject's actions. The effect of pressure from superiors (obedience pressure) was particularly strong.

The study contributes to a better understanding of the ethical behavior of practicing accountants. This understanding may be used to improve ethics education and to build better models for future research.


School of Accountancy

Document Type





tax, management accounting, social responsibility, survey, obedience theory, compliance, ethics

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