Academic journal article Journal of Business and Educational Leadership

Economic versus Moral Based Pedagogies for Business Ethics

Academic journal article Journal of Business and Educational Leadership

Economic versus Moral Based Pedagogies for Business Ethics

Article excerpt


Accounting practitioners and educators are currently facing increased scrutiny regarding professional ethics. The past decade has seen numerous high profile failures by accountants and auditors which have been particularly costly to society. Enron, Adelphia, Global Crossing, WorldCom, Bernard Madoff, and Lehman Brothers are just a few examples of the dozens of major ethical fiascoes which have tarnished the profession. The widely publicized cases of ethical misconduct in accounting seem to have become the norm rather than the exception. Extensive ethical preparation is, however, a mandatory component of the curriculum at virtually every AACSB accredited college of business. Ethics are clearly being taught; yet, there appears to be a major malfunction with respect to the absorption of these ethical ideas by practicing accountants and auditors.

Business educators must accept some responsibility for the pervasive and continuous pattern of corporate corruption. Williams (2004) argues that the Positive Economic Science paradigm which is currently taught in the majority of business programs has significant drawbacks with respect to teaching moral values:

"When economic man is used as the framework for our textbooks, the context for our theories, the matter-of-fact description of how people behave, it is seldom prefaced with the disclaimer that it is merely an imaginary construct that allows for the doing of our mathematics. We run the grave risk that it is communicated as a moral value. "

William's observation calls to question the pedagogical approach that academia takes when teaching business ethics. Is the self-interest based approach of economic man necessarily in conflict with proper moral and ethical values?

This study examines the effect of teaching accounting ethics from an altruistic approach versus the self-interest based approach of economic man (ethical egoism). Using a 2 x 2 full factorial "between subjects" experimental design the impact of teaching accounting ethics combined with altruism (high, low) and egoism (high, low) is examined in light of student perceptions of complex ethical cases.


Accounting ethics are largely based on the concept of altruism, which expresses a sincere concern for the welfare of others (Cheffers and Pakaluk, 2005). This is a core idea embedded in the AICPA Code of Professional Conduct as CPAs are required to place the interests of financial statement users and society above their own. In the absence of these values, auditor independence would be severely compromised along with the credibility of audited financial statements. Accountants in private practice are also required to adhere to altruistic ideals if they are employed by large, publicly traded companies through the provisions of the Sarbanes-Oxley Act of 2002 and International Standard on Quality Control No. 1. Accordingly, a significant portion of practicing accountants are required by law to behave in an ethical manner. Their employment can be legally terminated for ethical breaches, and they face the possibility of civil and criminal penalties for severe violations (Arens, et al., 2009).

Business ethical violations - or worse yet fraud - generally occur when self-interest is placed above the obligation to serve the needs of identified stakeholders. Under the view of "economic man," deliberate ethical violations can be perceived as rational as people are assumed to behave in a manner that maximizes their expected utility (Savage, 1954). In these situations the perceived value of serving others is subordinate to self-interest. Yet, how are these ethical norms taught in business schools? College textbooks in accounting invariably cover ethical content in terms of the Rules of Conduct, and they discuss the potential legal and economic consequences for violations, but they rarely delve into presenting the psychological motivations that lead people to choose unethical behavior. …

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