Ethical reasoning and selection-socialization in accounting

Abstract This paper extends the work of researchers who have examined the ethical reasoning of CPAs in professional practice. Its purpose is to explore the influence of accounting firm socialization upon the individual CPA's level of ethical reasoning. Based on cognitive-developmental theory, and using a well-known measure of ethical reasoning, two hypotheses regarding selection-socialization are explored. To test these hypotheses, a triangulated research design was incorporated, employing cross-sectional, longitudinal and experimental methods. Findings of all three studies corroborate the existence of ethical socialization whereby those progressing to manager and partner positions within the firm tend to posses lower and more homogeneous levels of ethical reasoning. Experimental findings also suggest that firm managers' promotion decisions are biased in favor of individuals possessing ethical reasoning that is closer to their own capacity. This implies that the ethical culture of the accounting firm stymies an individual's development to higher levels of ethical reasoning.

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