The role of uncertainty and loss-framing in ethical decision-making by accountants

Abstract

In line with the rules applying to all directors of a company, accountants also have the fiduciary duty to act ethically in all their decision-making. However, the widely-publicised cases of accounting fraud and misrepresentation of financial information is eroding public confidence in accountants. In order to address the topic of the role of uncertainty and loss framing in ethical decision-making by accountants, the researcher decided to apply a quantitative experimental research design in this study to collect primary data. This research design comprised three experimental groups, amounting to a total sample size of 167 accountants. The primary research was supported by secondary research, which included key literature on behavioural economics, prospect theory, various ethical decision-making frameworks, and the ethical positioning questionnaire. The present study revealed that situations framed negatively on the actions and behaviour of accountants, and where there was a perceived likelihood of a financial loss, there was a greater likelihood among accountants to consider unethical decision-making. Conversely, uncertain situations were unlikely to induce unethical decision-making. The study also explored the personal moral philosophy construct of taxonomy to determine if it can differentiate the extent of ethical behaviour between absolutists and situationists. Although the study established that there were some differences between the ethical behaviour of those found among absolutists and those identified among situationists, the results were not conclusive enough to clearly differentiate their ethical behaviour. However, the key contribution of this research is that it identified which framed decisions are more likely to result in unethical decisions being made by accountants and which framed situations are not likely to result in unethical decision-making.