Linda Thorne

The pandemic has altered accounting education with the widespread adoption of remote evaluation platforms. We apply the lens of the fraud triangle to consider how the adoption of remote evaluation influences accounting students’ ethical values by measuring the incidence of cheating behavior as well as capturing their perceptions of their opportunity to cheat and their rationalization of cheating behavior. Consistent with prior research, our results show that cheating is higher in the online environment compared to remote evaluation, although the use of proctoring software in online evaluation appears to mitigate but not eliminate students’ the unethical behavior. However, cheating was not reduced when students attest to an honor code during the beginning of an exam. Nonetheless, we find that the use of both proctoring software and honor codes reduces students’ perceptions of opportunity and rationalization of cheating behavior. It follows that the remote evaluation environment may unintentionally be negatively influencing the ethicality of students and future accounting professionals by promoting cheating behavior and, by so doing, negatively influencing the development of unethical values of accounting students and future accounting professionals. Educators should consider the use of appropriate educational interventions to reduce the incidence and opportunities for unethical behavior and, by so doing, help promote the development of ethical values in future accounting professionals. Further implications for teaching and the accounting profession are discussed.

We conduct a meta-analysis of the tax fairness–tax compliance literature from its inception in 1976 through 2021. We use an organizational justice perspective (Colquitt 2001) to differentiate between the dimensions of fairness that dominate tax fairness research. We find that the aggregate effect size of the fairness-compliance association is positive and of medium strength. We also find that distributive fairness has the strongest effect on taxpayers’ compliance and is largely driven by the subdimension of exchange equity. Other dimensions of fairness, namely, interactional (interpersonal and informational) and procedural, have smaller effect sizes. We also find a moderating effect of methodology. Our findings suggest both the importance of ensuring that tax dollars are used in ways that taxpayers value, while downplaying the effect of interactional aspects of tax administration, and the importance of carefully considering methodology when conducting tax fairness research.

This paper examines the effect of the 2018 change to the International Ethics Standards Board for Accountants (IESBA) Code of Ethics, NOCLAR, which is currently being rolled out to its approximately 138-member countries’ Code of Ethics. NOCLAR is an acronym for non-compliance with laws and regulations, and as enacted, NOCLAR adds language to the Code of Ethics that explicitly grants accountants the right to break confidentiality in the face of illegal acts (IESBA, http://www.ifac.org/publications-resources/responding-suspected-illegal-act, 2012). We use an experiment involving 113 Chartered/Certified Professional Accountants (CPA) from the US and Canada to examine how NOCLAR influences professional responsibility. We find that NOCLAR clarifies professional accountants’ professional responsibility to report fraud and elevates their professional responsibility to report illegal acts to an external authority. Implications for the accounting profession, society, and the implementation of the Code of Ethics are discussed.

We investigate how different cognitive conceptualizations of reference point and tax withholdings jointly influence aggressive tax filing. We utilize a field study with responses captured from actual taxpayers immediately after filing their returns. Consistent with both prospect theory and mental accounting perspectives, we hypothesize and find evidence that more aggressive filing decisions depend on mental categorization of whether taxpayers expect a tax refund or owe additional taxes relative to their expected asset position (EAP). We find a joint and additive impact of EAP with a cognitive link made between taxes and the categorization of amounts owed. Our findings suggest that more aggressive filing behavior is found in taxpayers in a tax loss position relative to their EAP and in those that do not separately categorize taxes owing from their own resources. By highlighting the importance of EAP and the cognitive separation of taxes owed, we provide insight for revenue agencies to use cognitive framing strategies to mitigate aggressive taxpayer behavior. The cognitive framing of EAP may be influenced by the use of installment payments and tax withholdings, but also may be affected by communications that alter taxpayers’ expectations of taxes owed.

In response to public pressure for accountability in the not-for-profit (NFP) sector, attempts have been made to adopt for-profit controls. These have generated mixed results. While many have argued that employees attracted to the NFP sector are “different,” little prior empirical evidence backs up this claim. To address this gap, we review the literature to identify claimed individual characteristics that might differ and use the survey method to examine whether these differences exist between the groups of responding managers working in the NFP and for-profit sectors. NFP respondents exhibit lower levels of narcissism, lower levels of entitlement, less extroversion, and a more externally oriented locus of control than their for-profit counterparts. In exploratory multivariate analysis, best predictors of NFP membership include extroversion, locus of control, conscientiousness, and moral reasoning. Rather surprisingly, the groups did not differ on altruism or tolerance for ambiguity. Implications for control system design are discussed.

Since taking office, the President of the United States has consistently refused to make his tax returns available for public scrutiny. In so doing, he has broken with presidential tradition and kept people guessing about what his tax returns would show if they were disclosed. Interestingly enough, in the absence of concrete knowledge about the President’s tax circumstances, some taxpayers perceive that he did not pay his fair share and others perceive that he did. This situation presents an opportunity for us to consider how vertical equity perceptions about the President’s fair share of taxes, and identification with the President via voting behavior, are jointly associated with taxpayers’ compliance. Using insights from equity theory as reported in Adams (in: Berkowitz (ed) Advances in experimental social psychology, Academic Press, New York, 1965) and social learning theory as reported in Bandura (Social learning theory, General Learning Press, New York, 1971, Social learning theory, Prentice Hall, Englewood Cliffs, 1977), we anticipate and find that those taxpayers who perceive that the President did not pay his fair share of taxes and who most closely socially identify with him have the lowest tax compliance. We use a survey of 600 American taxpayers to capture their perceptions of vertical equity, voting behavior, and tax compliance intentions. Our results may reflect that taxpayers who identify with the President will tend to model his tax-related actions, or may also indicate that some taxpayers vote for a president whose actions are similar to their own. Insights and implications for ethics and tax researchers and tax policy makers are discussed.

Prior research shows taxpayers’ perceptions of fairness leads to greater cooperation and compliance with tax authorities. Yet our understanding of tax fairness has been hampered by its general reliance upon models and measures of fairness developed by organizational fairness research, even though fairness is a perception subject to contextual influences. Accordingly, we attempt to gain insight into the influence of contextual factors on fairness through the development of a theoretically based and empirically derived model of tax fairness, grounded in organizational literature, but empirically tested in the tax context. Our analysis shows the extent to which items and dimensions found in the organizational fairness literature reflect taxpayers’ perceptions of tax fairness. Most importantly, our findings contribute to fairness research by identifying the role of relevant comparison groups in affecting perceptions of fairness, and thereby extends our understanding of the role of context in affecting fairness perceptions. Furthermore, by identifying the dimensions and items incorporated in perceptions of tax fairness, our study provides a foundation for tax researchers and policy makers to determine how best to promote voluntary taxpayers’ compliance and in so doing, mitigate tax avoidance and tax evasion.

The authors’ examination of corporate social responsibility (CSR) scores in dual-class firms provides a window on firms’ CSR performance when insulated from external pressure. Dual-class ownership confers greater voting rights on a superior class of shares held by insiders; consequently, managers of dual-class firms are insulated from external pressure from inferior class shareholders and, potentially, from society. The authors compare CSR scores in dual- and single-class firms and investigate the association between CSR scores and cash flow rights in dual-class firms. This analysis reveals that dual-class firms have lower CSR scores than their single-class counterparts and that CSR scores in dual-class firms are positively related to the relative cost of CSR borne by the superior class of shares. The findings suggest that external accountability encourages CSR performance, and CSR performance is higher when the superior class bears a smaller portion of the cost of CSR activities. It follows that the analysis suggests the importance of governance structures for encouraging CSR, and the dampening impact of cost to CSR performance.

Purpose: The purpose of this study is to validate the Matten and Moon (2008) implicit-explicit corporate social responsibility (CSR) model by examining whether the respective differences in CSR practices between Europe and the USA reflect their respective societal expectations.

Design/methodology/approach: The principal component analysis is used to develop an innovative societal expectations index (SEI). This study tests the relationship between SEI and CSR through panel data and t-tests.

Findings: The empirical findings show a significant association between the SEI and all forms of CSR, which provides empirical support for Matten’s and Moon’s implicit-explicit framework.

Originality/value: This study is the first to develop an SEI to validate the Matten and Moon (2008) model that predicts implicit countries would adopt and conform to broader societal expectations for CSR, and therefore be more likely to embrace CSR activities than their counterparts in explicit countries.

Although the role of fairness in tax compliance has been of increasing interest among the academic and professional tax communities, very little is known about the role of interactional fairness. Interactional fairness refers to the quality of the treatment provided to individuals from authority figures, such as tax authority representatives. We conduct an experiment using US taxpayers to examine the role of interactional fairness on tax compliance intentions, and how detection influences this relation. Taxpayers’ detection salience reflects their perceptions that they will be audited by the tax authority. Using insights from conditional cooperation theory, we predict and find that detection moderates the relation between interactional fairness and tax compliance intentions, such that the effect of interactional fairness on tax compliance intentions diminishes with higher detection. We discuss the implications of our results for tax policy.

As the scope of the audit continues to broaden (Cohen, Krishnamoorthy, and Wright 2017), research questions in management control and internal control are beginning to overlap. Even so, there is little overlap between these fields in terms of published research to date. The purpose of this paper is to take a step in bridging the gap between the management control and the internal control literatures. We survey relevant findings from the extant management control literature published between 2003 and 2016 on dysfunctional behavior and the ways in which it might be mitigated. We then use the fraud triangle as an organizing framework to consider how the management control literature might help to address audit risk factors identified in SAS 99/AU SEC 316 (AICPA 2002). The outcome of our analysis is meant to identify and classify the extant management control literature of relevance to research on internal control in a manner that researchers new to the management control literature will find accessible. We conclude with a set of future research opportunities that can help to broaden the scope of current research in internal control.

We considered the question of how corporate social responsibility (CSR) differs between Canada and the U.S. Prior research has identified that national institutional differences exist between the two countries [Freeman and Hasnaoui, J Business Ethics 100(3):419–443, 2011], which may be associated with variations in their respective CSR practices. Matten and Moon [Acad Manag Rev 33(2):404–424, 2008] suggested that cross-national differences in firms’ CSR are depicted by an implicit–explicit conceptual framework: explicit CSR practices are deliberate and more strategic than implicit CSR practices. We compared Canada and U.S. CSR and examined how CSR strategic alliances, CSR reporting, and CSR performance in the two countries correspond to implicit versus explicit CSR practices, which we link to stakeholder and signaling perspectives. We relied upon a new database, the Sustainalytics Global Platform (SGP), and we found a positive association exists between CSR strategic alliances and the number of years that firms have issued standalone CSR reports in both countries. Moreover, we found that CSR scores mediated this association in the U.S., as U.S. firms with high CSR scores typically engage in more CSR strategic alliances. In Canada, we did not find this mediating effect. Our findings suggest that U.S. firms engage in signaling activities that are more strategic and explicit than their Canadian counterparts. This paper closes with implications for practice and theory.

Written communication is the primary means used by tax authorities to communicate with taxpayers. Prior research shows that the content of written communications by tax authorities can influence taxpayers’ compliance by appealing to interactional fairness. Interactional fairness refers to the quality of treatment that individuals receive from an authority figure and has two dimensions, tone and information. In written communications from a tax authority, inadvertently or by design, both tone and information are conveyed. In our study, we examine the impact of both dimensions on taxpayers’ compliance through an experiment involving 287 taxpayers. We find an interaction between tone and information, such that compliance is highest in the presence of high information and an authoritative tone. We also find that compliance is positively associated with information. Our findings have practical implications for tax authorities in determining how best to use written communications to encourage taxpayers’ compliance.

Increasingly, U.S. firms voluntarily issue standalone corporate social responsibility (CSR) reports to demonstrate to society a commitment to social and environmental activities (Bebbington, Larrinaga, & Moneva, 2008; Erusalimsky, Gray, & Spence, 2006). To ascertain the effect of standalone CSR reports on investors, we compared the association between CSR performance scores and subsequent stock returns for firms that issue standalone CSR reports versus those that do not. Consistent with a signaling perspective (Akerlof, 1970), we found that firms that voluntarily issue standalone CSR reports have a stronger association between total CSR and CSR strengths and subsequent stock returns than firms that do not. Our findings indicated that investors are relying on standalone CSR reports because they reward CSR performance for firms that issue standalone CSR reports CSR performance for those that do not issue standalone CSR reports.

Purpose – The purpose of this paper is to examine the effects of three different types of budget goals (egocentric individual, groupcentric individual and group) on group performance of an additive task, assigned within an individual budget-based incentive contract.While previous research has established that budget-based incentive contracts motivate higher group performance than piece rate contracts for additive group tasks, no studies, which we are aware of, have considered explicitly the type of goal within this context.

Design/methodology/approach – We conduct a 3 2 experiment in which we manipulate the presence of an individual goal (egocentric, groupcentric and absent) and a group goal (present and absent) on group performance of an additive task.

Findings – Group performance is higher for groups assigned groupcentric individual goals than for groups assigned egocentric individual goals, either alone or in combination with a group goal. Practical implications – Egocentric individual goals may reinforce an individualistic orientation, which may work against the potential gains from having group members adopt more of a group focus.

Originality/value – This paper considers how groupcentric individual goals may improve group performance. The management accounting literature typically examines just egocentric individual goals.

Purpose – The purpose of this paper is to provide insight into the companies’ motivations to issue or not issue voluntary standalone corporate social responsibility (CSR) reports in the Canadian context.

Design/methodology/approach – The authors realized a questionnaire survey that asked Canadian companies why they do or do not issue standalone CSR reports, what their motivations and costs are, and the extent to which they comply with GRI guidelines.

Findings – The results show that larger firms issue standalone CSR reports. As larger firms have more political visibility and are subject to greater external scrutiny than smaller firms (Watts and Zimmerman, 1986), the findings indicate that firms primarily issue standalone CSR reports in response to external scrutiny by stakeholders, which is consistent with a stakeholder perspective. The survey also identifies that ancillary motivations for Canadian firms for issuing standalone CSR reports are consistent with legitimacy and signalling perspectives.

Research limitations/implications – The authors acknowledge that the generalizability of the findings is limited due to the sample being situated within a single national context. The inferences drawn from such a sample in Canada may not be applicable to other countries with different national institutional contexts. In addition, the small size of the sample may limit the generalizability of the findings. The authors also did not specifically consider the quality of the CSR reports in the study. Finally, the work may be affected by the inherent weaknesses associated with survey research, including the inherent bias of the individuals responding to the survey.

Originality/value – The research adds to the growing body of research on voluntary CSR disclosures, with particular reference to the Canadian context.

Over the past two decades, more and more U.S. firms are voluntarily issuing costly standalone Corporate Social Responsibility (CSR) Reports. Nevertheless, firms’ motivations for issuing standalone CSR Reports are not clear. In this paper, we consider two different explanations: signaling and greenwashing. The first explanation, signaling, proposes that firms use standalone CSR Reports as a signal of their superior commitment to CSR, which suggests firms with stronger social and environmental records will be more likely to issue standalone CSR Reports as compared to those without. The second explanation, greenwashing, proposes that firms use standalone CSR Reports to pose as “good” corporate citizens even when they do not have stronger social and environmental records. To provide insight into these explanations we compare the CSR performance scores of firms that issue CSR reports to those firms that do not. We control for firm size, leverage, profitability and industry. We find that firms that voluntarily issue standalone CSR Reports generally have higher CSR performance scores, which suggests that firms are using voluntary CSR Reports to publicize stronger social and environmental records to stakeholders.

Over the last decade, many published papers lament auditors’ shift from professionalism to commercialism and call for increasing auditors’ commitment to the public interest (see, e.g., Bailey, 2008; Fogarty & Rigsby, 2010; Lampe & Garcia, 2013; Wyatt, 2004; Zeff, 2003a, 2003b). At the same time, suggesting effective methodologies for improving auditors’ commitment to the public interest is particularly challenging because issues arising in the audit context are complex, and often involve tradeoffs between multiple stakeholders (e.g., Gaa, 1992; Massey & Thorne, 2006). An understanding of auditors ethical characterizations across separate phases of the audit process is needed so that methodologies can be devised to improve auditors’ commitment to the public interest. Thus, in this paper we interviewed 24 auditors and asked them to describe critical ethical incidents that they have encountered throughout the various phases of the audit process. Our results not only document the tension underlying the shift between professionalism and commercialism in auditing suggested by others, but also show that ethical conflicts are found in each phase of the audit and there are cross-phase differences in the auditors’ ethical characterizations. Limitations of the findings are also discussed as are suggestions for future research.

Our paper explores the evolution in the reporting of Corporate Social Responsibility (CSR) for 115 Canadian firms (51 cross-listed on U.S. stock exchanges) throughout the seven year period of 1999–2006, which was the period before and after SOX and Bill 198 were enacted, resulting in a period of increasing pressure for CSR and CSR disclosure (Ballou, Heitger, & Landes, 2006). We examined CSR scores for Canadian firms listed only on Canadian stock exchanges and for Canadian firms cross-listed on U.S. exchanges. During this period, our analysis shows an overall decrease in CSR scores for all Canadian firms in our sample, and for both our subsamples of firms: Canadian firms cross-listed on U.S. stock exchanges and Canadian firms listed only on Canadian exchanges. Our analysis suggests that as a result of increased scrutiny facilitated by the regulatory changes, CSR disclosures become more transparent and comprehensive: CSR Strengths and CSR Weaknesses Scores both declined after 2002 resulting in an overall decline in Total CSR scores. Implications for research and practice are discussed.

This study examined the association of nurses’ ethical conflict with hospitals with organizational commitment, stress, turnover intention, absence and turnover. Participants were 410 nurses working at four different Canadian hospitals. A longitudinal design was used where nurses completed a questionnaire to capture ethical conflict, stress and organizational commitment, and one year later, measures of turnover intention, absence and actual turnover were obtained for the same sample. We found three aspects of nurses’ ethical conflict with hospitals: patient care values, value of nurses, and staffing policy values. Our findings showed that all three aspects of nurses’ ethical conflict are associated with stress and patient care values is associated with actual turnover. We also found that staffing policy values is predictive of turnover intention, and that patient care values is predictive of absenteeism. Thus, our findings show the multidimensionality of nurses’ ethical conflict with hospitals. Further implications of our findings for practice and theory are discussed.

The events surrounding the passage of the Sarbanes-Oxley Act of 2002 (Sarbanes) offer an opportunity to reflect on the influences of public pressure and possible public policy shifts on CSR behavior in a capital market experiencing excessive moral debt. Using the passage of Sarbanes to symbolize a potential public policy shift driven by public pressure, we examine the influence of social legitimacy variables on corporate social responsibility (CSR) behavior before (1991–2001) and after (2002–2005) the passage of the Sarbanes-Oxley Act of 2002. We posit that changes in CSR strategies surrounding the passage of Sarbanes were used to maximize stakeholder interests by addressing social legitimacy involving corporate accountability issues.