The effects of ethical pressure and power distance orientation on unethical pro‐organizational behavior: the case of earnings management

• Author: Dane K. Peterson,Qing Tian
• Published date: 01 April 2016
• Date: 01 April 2016
• DOI: http://doi.org/10.1111/beer.12109

The effects of ethical pressure

and power distance orientation

on unethical pro-organizational

behavior: the case of earnings

management

Qing Tian

1

and Dane K. Peterson

2

1. School of Business, Macau University of Science and Technology, Macao, China

2. Department of Marketing, Missouri State University,Springfield, Missouri, USA

A multiphase study tested a proposed mediated moderation model for the joint effects of ethical pressure and

power distance orientation on accountants’ ethical judgments of earnings management. Results based on a

sample of 354 accountants from China indicated that the relationship between ethical pressure and ethical

judgments of earnings management is contingent on the accountants’ power distance orientation. That is, the

relationship between ethical pressure and ethical judgments of earnings management was stronger for

accountants with a high power distance orientation. The results also demonstrated that ethical beliefs in

support of the company serve as a mediator for the interaction effect of ethical pressure and power distance

orientation on the outcome. These results are discussed in terms of viewing earnings management as a form of

unethical pro-organizational behavior which can be effectively investigated within the framework of the

person-situation interactionist model.

Introduction

Unethical pro-organizational behavior (UPB) refers

to socially unacceptable employee behavior moti-

vated by a desire to promote the company’s interest

(Umphress et al. 2010). Frequently cited examples of

UPB include deceiving customers, lying to clients,

putting profits ahead of public safety, and falsifying

financial reports. This study examines the attitudes

of business professionals toward one of the most

widely investigated UPBs within the framework of a

person-situation interactionist model. More specifi-

cally, this study examines the ethical views of

accountants with respect to manipulating reported

earnings so that the financial results will accomplish

a desired goal which is commonly referred to as earn-

ings management (Mulford and Comiskey 2011).

The situational factor included in this study as a

potential contributing factor to UPB is ethical pres-

sure. Based on Leicht & Fennell (1997), Peterson

(2003) defined ethical pressure as a situation in which

the employees feel pressured by their peers, supervi-

sors, and other members of the organization to com-

promise their personal values in order to achieve

organization goals resulting in an ethical conflict for

the employee. The personal factor examined in this

study is individual power distance orientation which

represents the extent to which a person believes it is

inappropriate to challenge or question the decisions

made by leaders (Kirkman et al. 2009).

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C2016 John Wiley & Sons Ltd, 9600 Garsington Road,

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doi: 10.1111/beer.12109

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Business Ethics: A European Review

Volume 25 Number 2 April 2016