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Re-Thinking the Intentionality of Fraud: Constructing and Testing the Theory of Unintended Amoral Behavior to Explain Fraudulent Financial Reporting.

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Date Issued:
2016
Abstract/Description:
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).
Title: Re-Thinking the Intentionality of Fraud: Constructing and Testing the Theory of Unintended Amoral Behavior to Explain Fraudulent Financial Reporting.
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Name(s): Dill, Andrew, Author
Sutton, Steven, Committee Chair
Arnold, Vicky, Committee Member
Schmitt, Donna, Committee Member
Schminke, Marshall, Committee Member
University of Central Florida, Degree Grantor
Type of Resource: text
Date Issued: 2016
Publisher: University of Central Florida
Language(s): English
Abstract/Description: 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).
Identifier: CFE0006097 (IID), ucf:51211 (fedora)
Note(s): 2016-05-01
Ph.D.
Business Administration, Dean's Office CBA
Doctoral
This record was generated from author submitted information.
Subject(s): Financial Statement Fraud -- Ethical Fading -- Bounded Ethicality -- Pay Inequality -- Earnings Forecasts -- Theory of Unintended Amoral Behavior
Persistent Link to This Record: http://purl.flvc.org/ucf/fd/CFE0006097
Restrictions on Access: campus 2017-05-15
Host Institution: UCF

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