My three-paper dissertation is aimed at applying the concepts of bounded ethicality and ethical fading to accounting fraud. Typical of relatively new fields such as behavioral ethics, theoretical models are scarce (Tenbrunsel & Smith-Crowe, 2008). As such, the purpose of Study 1 is to unify disparate theories and ideas from psychology and behavioral ethics as a means of constructing a theory, the Theory of Unintended Amoral Behavior (TUAB), which includes the concepts of bounded ethicality and ethical fading. In addition, the pressure for management to meet earnings expectations is discussed through the lens of the TUAB as an example of how one may unknowingly misreport. Studies 2 and 3 apply the TUAB to investigate how certain contextual factors interact with egocentric biases to increase the likelihood of ethical fading. Specifically, Study 2 consists of an experiment exploring how inferior pay among managers interacts with egocentric perceptions of fairness and envy to affect the likelihood of one engaging in ethical fading and fraudulent behavior. Study 3 also utilizes an experimental methodology to examine how the pressure to meet earnings forecasts interacts with egocentric perceptions of fairness and negative affect to influence the probability of ethical fading and fraudulent acts. The results for Study 2 indicate that one who is paid at a lower rate is more likely to view this disparity as unfair, which leads to a greater feeling of envy. Although envy had no significant direct effect on ethical fading in the primary analyses, a supplemental analysis revealed that a person's risk preference might moderate this relationship. The primary findings of Study 2 suggest that individuals who experience a higher degree of ethical fading are more likely to commit fraud, and that ethical fading, along with perceived unfairness, seem to be significant psychological processes that explain how differences in pay may lead to fraud. The primary finding of Study 3 is that, like Study 2, fraud is more likely to occur as an individual experiences a higher degree of ethical fading. Furthermore, this study suggests that those who are closest to meeting an earnings target are the most likely to engage in fraudulent behavior. Finally, the results failed to find any support that one's egocentric perceptions of fairness and negative affect contribute towards his or her ethical behavior in a goal achievement setting. The primary contributions of this dissertation is that it unifies various theories and ideas from psychology and behavioral ethics to establish a testable theory (TUAB) that includes the concepts of bounded ethicality and ethical fading, serves as an initial test of TUAB, and provides evidence that unethical behavior is not necessarily the result of one consciously forsaking his or her ethics for some other desired goal (i.e., profit).
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Doctor of Philosophy (Ph.D.)
College of Business Administration
Business Administration; Accounting
Length of Campus-only Access
Doctoral Dissertation (Open Access)
Dill, Andrew, "Re-Thinking the Intentionality of Fraud: Constructing and Testing the Theory of Unintended Amoral Behavior to Explain Fraudulent Financial Reporting" (2016). Electronic Theses and Dissertations, 2004-2019. 4956.