Academic journal article Accounting & Taxation

An Exploratory Study of Professional Ethical Standards, Positive Budgeting Orientation, and the Mediating Role of Corporate Ethical Values

Academic journal article Accounting & Taxation

An Exploratory Study of Professional Ethical Standards, Positive Budgeting Orientation, and the Mediating Role of Corporate Ethical Values

Article excerpt


The purpose of this exploratory study was to empirically assess interrelationships between professional ethical standards, corporate ethical values, and the concept of positive budgeting orientation. It was believed that perceived ethical values would fully or partially mediate the proposed positive relationship between perceived professional ethics and positive budgeting in companies. Survey data were gathered from experienced managers, some of which were members of the Institute of Management Accountants, and students in MBA and Executive MBA programs located in the Mountain West and Midwestern regions of the United States. Overall, 290 surveys of managers who worked in a variety of business occupations were assessed. The findings showed a strong positive association between professional-ethical standards and corporate ethical values, as well as between ethical values and a positive budgeting orientation. In the presence of these relationships, the professional- ethical standards and positive budgeting orientation variables were unrelated, indicating that perceived ethical values functioned as a full mediator. The findings implied that ethical environments in both professions and organizations can be used to enhance positive budgetary practices.

JEL: M14, M41

KEYWORDS: Professional Ethics, Positive Budgeting, Corporate Ethical Values


Ethical guidelines that influence the workplace behaviors and practices of employers and their employees are often institutionalized in different professional and organizational enviromnents. At the occupational level, professional ethical standards stem from ethical guidelines embedded in education programs, licensures, and/or certification processes that identify with an ethics code and related ethical monitoring capabilities (Bullock & Panicker, 2003; Gaumnitz & Lere, 2004). Ultimately, professional ethical standards enhance employee ethical attitudes and commitment (Valentine & Fleischman, 2008b). At the organizational level, corporate ethical values (also operationalized as ethical culture/climate) refer to the formal and informal ethics-related policies used by companies to set the ethical tone within the workplace (Hunt et al., 1989; Sims, 1991; Trevino et al., 1998; Trevino & Nelson, 2004). These ethical principles affect many important employee attitudes and perceptions (e.g., Hunt et al., 1989; Valentine et al., 2011a; Valentine et al., 2011b; Valentine et al., 2006). In practice, these two environments should work together to influence important organizational outcomes, with one such factor being a positive budgeting orientation, an exploratory concept linked to beneficial budgeting practices in a firm. There is reason to believe that these contextual factors are keenly interrelated. For instance, a linkage between professional ethical standards and corporate ethical values can be identified using the multi-stakeholder governance network, which comprehensively overlays various interfaces among professional associations, professional employees, all levels of organizations, and governments (Bonn & Fisher, 2005; Gotterbarn, 2009). The former stakeholders represent self-regulation and the latter the moral floor, respectively (Bonn & Fisher, 2005; Gotterbarn, 2009). Most importantly, the multi-stakeholder governance approach helps explain how employees may defer to their professions' ethics training, standards, and expectations when facing ethical disconnects related to functional job-related circumstances in their organization (Higgs-Kleyn & Kapelianis, 1999), thus shaping organizational practice and influencing what employees elect to do at work.

A key motivation then is to link the professional ethical standard-corporate ethical value relationship to important work-based outcomes related to functional ethical issues. We contend that a positive budgeting orientation is one such relevant variable. For example, corporate ethical values influence employee workgroup outcomes in the marketing, human resources, and accounting context where employees may face unique budget-related ethical dilemmas resulting from pressures to meet quotas or performance targets. …

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