20-minute PowerPoint Presentation

Report
Organizational Leadership
and Ethical Climate in Utah’s
Certified Public Accounting Profession
(20-minute Presentation Slides)
by
Jeffrey N. Barnes, CPA, MAcc
Oral Defense Slides in Partial Fulfillment
of Requirements for the Degree
Doctor of Business Administration
UNIVERSITY OF PHOENIX
February 2013
Chapter 1, Introduction
• CPAs are critically involved with assuring fair presentation of
financial statements.
• Fraudulent financial reporting continues (Arens, Elder, & Beasley, 2012; Apostolou
& Crumbley, 2007).
• Foundations of fraudulent behavior are rooted in sociological,
psychological, and moral-development theories (Albrecht, Romney,
Cherrington & Roe, 1982).
Chapter 1, Introduction
Significance of the Problem
• Accounting profession to benefit from the study by,
– understanding current state of organizational leadership,
– finding confirmatory or disconfirmatory evidence that
leadership correlates to ethical perceptions,
– determining if religiosity and regulatory influence relate to
leadership and ethical climate perceptions, and
– designing leadership training interventions.
Chapter 1, Introduction
Overview of the Research Design
• H10: A leaders’ transformational leadership style does not
relate to the subordinate’s perception of the firm’s ethical
climate in Utah.
• H20: A leaders’ transactional leadership style does not relate
to the subordinate’s perception of the firm’s ethical climate in
Utah.
• H30: A leaders’ laissez-faire leadership style does not relate to
the subordinate’s perception of the firm’s ethical climate in
Utah.
Chapter 1, Introduction
Overview of the Research Design
• H40: Known exogenous regulatory/punishment factors, as
perceived by subordinates, do not relate to the subordinate’s
perception of the firm’s ethical climate and immediate
leadership in Utah.
• H50: The degree of service or church attendance does not
relate to the subordinates’ perception of the firm’s ethical
climate and immediate leadership in Utah.
• Alternate hypotheses, for each of the null hypotheses,
suggest that relationships exists
Chapter 1, Introduction
Overview of the Research Design
Chapter 2, Review of Literature
Introduction
• The current study,
– explains previous research related to leadership and ethical climate,
which is sparse in the accounting profession,
– provides secondary evidence regarding regulatory controlling
subordinate effect, and
– provides secondary evidence regarding the nascent emerging
positive subordinate effects of religiosity.
Chapter 2, Review of Literature
Documentation
Category of Documentation
Number
Percentage
2006 to present
123
44.2%
Prior 2006
154
55.8%
All references
277
100.0%
Founding or extending theorists
41
14.8%
Empirical research
83
30.0%
Peer-reviewed articles
198
71.5%
Books
57
20.6%
Dissertations/unpublished research
4
1.4%
Official websites
18
6.5%
Chapter 2, Review of Literature
Summary
• Both the lack of empirical research into the public accounting
profession and the possible insights correlative influence
these two moderating variables could provide and
substantiate the additional needed empirical studies
regarding the current state of accounting firms’ ethical
climate structure and the prevailing leadership style typically
exhibited.
Chapter 2, Review of Literature
Summary
• An organization’s ethical climate, is founded on the collective
foundation of it individuals moral and ethics philosophies.
These moral and ethical philosophies are related to the five
empirically derived ethical climate types found within
organizations.
• Organizational leadership shapes and is shaped by the
organization’s ethical climate. Potentially affecting the public
accountants’ perceptions of organizational leadership and
ethical climate are two potential moderating variables, which
are awareness of regulatory statutes and personal religiosity,
respectively.
Chapter 3: Method
Theoretical Model Design
K now n E xogenous
R egulatory/P unishm ent
F actors
(M V : H 4)
1 F S G O S cale
(F S G O S urvey,
12 Q uestions)
H4
H4
S uperiors'
L eadership S tyle
(IV : H 1, H 2, H 3)
9 L eadership S cales
H 1, H 2, H 3
S ubordinates'
P erception of
5 E thical C lim ate S cales
(D V )
(E C Q S urvey,
26 Q uestio ns)
(M L Q S urvey,
45 Q uestio ns)
H5
H5
E xtent of
R eligiosity/C om passionate
S ervice
(M V : H 5)
1 S cale
L egend:
DV
IV
MV
H
(R E L S urvey,
4 Q uestions)
D ependent V ariable
Independent V ariable
M oderating (Intervening) V ariable
H ypothesis
F igure 2. S tatistical Integrated L eadership & E thical C lim ate F ram ew ork
Chapter 3: Method
Instrumentation
• Four instruments were used in this research study, the
– Multifactor Leadership Questionnaire (MLQ), or standard MLQ, or
also known as the MLQ 5X short, by Avolio and Bass (2004),
– Ethical Climate Questionnaire (ECQ), by Victor and Cullen (1987,
1988),
– Understanding of Federal Sentencing Guidelines for Organizations, by
researcher (2012), and
– Religiosity, by researcher (2012).
Chapter 3: Method
Population
• In 2010, approximately 1,175 certified public accountants
(CPAs), in the practice of public accounting, in the State of
Utah and members of the Utah Association of Certified Public
Accountants (UACPA, 2009).
• There were 469 separate physical CPA firm offices in Utah at
the time of the study, many with below five CPAs. Of the 469
firms, only 41 firms with five or more CPAs exist (UACPA, 2009).
• 11 CPA firms provided written permission to contact
organization personnel, via email, for the administration of
the electronic survey of this research study.
Chapter 3: Method
Data Collection
(Cont.)
• The original request was sent on February 7, 2012, the
second request was sent on February 18, 2012, and the third
and last request was sent March 13, 2012.
• The 257 email addresses, at the time the survey was
administered, there was provided 236 continuing valid
prospective respondents. The reduction of 21 emails
represented natural attrition from the firms. The number of
survey participants was 103 from a target population of 236,
providing a 43.6% response rate.
Chapter 3: Method
Researcher Error with ECQ Instrument
Proper Ethical Climate Questionnaire Scale and Scale Used in This Study
Proper ECQ Measurement Scale
Measurement Scale of this Study
0—Completely false
1—Mostly false
2—Somewhat false
3—Somewhat true
4—Mostly true
5—Completely true
1—Completely false
2—Mostly false
3—Somewhat false
4—Mostly true
5—Completely true
(Cont.)
Chapter 3: Method
Researcher Error with ECQ Instrument
(Cont.)
• According to Bart Victor, Ph.D. (personal communication,
August 2, 2012), who is one the originators of the Ethical
Climate Questionnaire (Victor and Cullen, 1988), this study’s
collected data would expect to still be meaningful. He
provided the following guidance,
. . . the data collection need not be reperformed; to address the scale
error in the ‘Methods’ section of the dissertation; to state that the
existing data means, variances, and correlations are meaningful and
reportable; to suggest that the scale errors do not cause a systemic or
universal disqualifying error, because the recorded survey
respondents’ impressions about the perceived ethical climate types
are still valid; to not transform the data, thus, to use the existing data
as is; and to check for similar intercorrelations and reliability.
Chapter 3: Method
Correlation Analysis
Guilford Interpretation of the Magnitude of Significant Correlations
Absolute Value of Rho (r)
Interpretation
< .20
Slight, almost no relationship
.20 - .39
Low correlation, definite but small relationship
.40 – .69
Moderate correlation, substantial relationship
.70 – .89
High correlation, strong relationship
.90 – 1.00
Very high correlation, very dependable relationship
Source: Van Aswegen & Engelbrecht, 2009, p. 5.
Chapter 3: Method
ANOVA Analysis
• Prior to running the ANOVA analyses, assumptions for
ANOVA were tested. The assumptions for normality were
tested, which ascertain that the scores be normally
distribution around the mean of the dependent variable.
Histograms were developed for all the dependent variable
ethical climate types.
• Also tested was the homogeneity of variance, which requires
that the groups have equal variances in the population.
Scatterplots of dependent variable’s various ethical climate
types were constructed to determine the absence of
heteroscedasticity. Both histograms and scatterplot tests
were performed visually.
Chapter 3: Method
ANOVA Analysis
(Cont.)
• ANOVA analysis was performed for those correlative
relationships with statistical significance. ANOVA or analysis
of variance provided the F-crit statistic (F-test, F) , R2, and
significance.
Chapter 3: Method
Univariate Analysis
• Statistical analysis also treated the demographic categories,
with sufficient subsample size, as independent variables.
• Running univariate analysis of variances between the
demographic independent variable and the leadership
independent variable to the ethical climate’s dependent
variables was performed. Those relationships that
demonstrated significant relationships were reported
Chapter 4: Results
Statistical Analyses
• Findings for Hypothesis 1—Transformational Leadership’s
Relationship to Ethical Climates
• Findings for Hypothesis 2—Transactional Leadership’s
Relationships to Ethical Climates
• Findings for Hypothesis 3—Laissez-faire Leadership’s
Relationships to Ethical Climates
• Findings for Hypothesis 4—Regulatory Influence Relationships
to Leadership and Ethical Climates
• Findings for Hypothesis 5—Religiosity’s Relationships to
Leadership and Ethical Climates
• Limited Cross-sectional Statistical Analysis
• Post Hoc Power and Effect Size Analysis
Chapter 4: Results
Findings for Hypothesis 1--Correlations
Transformational
(IV)
Caring Lawcode
(DV)
(DV)
Pearson Correlation
.411
Significance (2-tailed), p-value .000**
N
103
.282
.004**
103
Rules
(DV)
.402
.000**
103
Instrumental Independence
(DV)
(DV)
-.525
.000**
103
.093
.349
103
Chapter 4: Results
Findings for Hypothesis 1--ANOVA
Transformation Leadership to
Caring Ethical Climate
Model
Sum of
Squares
df
Regression
Residual
Total
187.525
921.678
1109.204
1
101
102
Model
Transformation Leadership to
Lawcode Ethical Climate
Regression
Residual
Total
Model
Transformation Leadership to
Rules Ethical Climate
Transformation Leadership to
Instrumental Ethical Climate
Regression
Residual
Total
Sum of
Squares
28.873
334.486
363.359
Sum of
Squares
72.129
373.521
445.650
Mean
Square
df
1
101
102
df
1
101
102
Model
Sum of
Squares
df
Regression
Residual
Total
648.221
1706.692
2354.913
1
101
102
187.525
9.126
Mean
Square
28.873
3.312
Mean
Square
72.129
3.698
Mean
Square
648.221
16.898
F-test
R2
Sig.
20.550
.169
.000**
R2
Sig.
.079
.004**
F-test
8.718
F-test
R2
Sig.
19.504
.162
.000**
F-test
R2
Sig.
38.361
.268
.000**
Chapter 4: Results
Findings for Hypothesis 2--Correlations
Transactional
(IV)
Pearson Correlation (Rho)
Significance (2-tailed), p-value
N
Caring Lawcode Rules Instrumental Independence
(DV)
(DV)
(DV)
(DV)
(DV)
.054
.591
103
.149
.132
103
.152
.125
103
.054
.585
103
-.038
.072
103
Chapter 4: Results
Findings for Hypothesis 3--Correlations
Laissez-faire
(IV)
Pearson Correlation (Rho)
Significance (2-tailed), p-value
N
Caring Lawcode Rules Instrumental Independence
(DV)
(DV)
(DV)
(DV)
(DV)
-.073
.462
103
-.143
.151
103
-.237
.016*
103
.247
.012*
103
.010
.919
103
Chapter 4: Results
Findings for Hypothesis 3--ANOVA
Laissez-faire Leadership to
Rules Ethical Climate
Model
Laissez-faire Leadership to
Instrumental Ethical Climate
Model
Regression
Residual
Total
Sum of
Squares
24.995
420.655
445.650
Sum of
Squares
Regression 143.840
Residual
2211.073
Total
2354.913
df
Mean
Square
1 24.995
101 4.165
102
df
1
101
102
Mean
Square
143.840
21.892
F-test
6.001
F-test
6.570
R2
Sig.
.056
.016*
R2
Sig.
.061
.012*
Chapter 4: Results
Findings for Hypothesis 4—Correlations
FSGO Understanding
(IV)
Pearson Correlation
Significance, (2-tailed), p-value
N
Caring Lawcode Rules Instrumental Independence
(DV)
(DV)
(DV)
(DV)
(DV)
-.002
.990
49
.220
.129
49
.165
.257
49
-.284
.048*
49
.048
.742
49
Chapter 4: Results
Findings for Hypothesis 5--Correlations
REL Religiosity
(IV)
Pearson Correlation (Rho)
Significance (2-tailed), p-value
N
Caring Lawcode Rules Instrumental Independence
(DV)
(DV)
(DV)
(DV)
(DV)
-.091
.363
103
-.043
.669
103
-.084
.401
103
.021
.831
103
-.110
.268
103
Chapter 4: Results
Cross-sectional Analyses
• To understand the significant interaction between gender (or with
any other demographic independent variable), and transformational leadership (or any
other independent variable), on the caring ethical climate type perception (or
any other dependent variable), the transformational leadership (or any other independent
variable) was grouped into those scoring higher than one standard
deviation (+1SD) and those scoring lower than one standard
deviation (-1SD) and plotted with gender (or with any other demographic
independent variable).
Chapter 4: Results
Limited Cross-sectional Statistical Analysis
Gender/Transformational Leadership to Caring Ethical Climate
Category D2
(Gender)
Female (1)
Male (2)
Total
Source
Corrected Model
Intercept
Gender (D2)
Transformational
Gender (D2) *
Transformational
Error
Total
Corrected Total
Frequency
29
74
103
Type III Sum
Of Squares
Mean Square
df
F
Sig.
a
254.542
1506.910
59.265
28.464
3
1
1
1
84.847
1506.910
59.265
28.464
9.828
174.553
6.865
3.297
.000
.000
.010
.072
48.949
854.662
63303.000
1109.204
1
99
103
102
48.949
8.633
5.670
.019*
Chapter 4: Results
Limited Cross-sectional Statistical Analysis
(Cont.)
Service Function/Transformational Leadership to Lawcode Ethical Climate
Category D8
(Service Function)
Frequency
Assurance (1)
Tax (2)
Total
Source
Corrected Model
Intercept
Assurance and Tax (D8)
Transformational
Assurance and Tax (D8) *
Transformational
Error
Total
Corrected Total
61
35
96
Type III Sum
Of Squares
50.463 a
1348.360
20.225
14.507
16.339
292.162
30802.000
342.625
df
Mean
Square
3
16.821
1 1348.360
1
20.225
1
14.507
1
92
96
95
16.339
3.176
F
Sig.
5.297
424.591
6.369
4.568
.002
.000
.013
.035
5.145
.026*
Chapter 4: Results
Limited Cross-sectional Statistical Analysis (Cont.)
Service Function/Transformational Leadership to Rules Ethical Climate
Category D8
(Service Function)
Assurance (1)
Tax (2)
Total
Source
Corrected Model
Intercept
Assurance and Tax (D8)
Transformational
Assurance and Tax (D8) *
Transformational
Error
Total
Corrected Total
Frequency
61
35
96
Type III Sum
Of Squares
df
Mean
Square
F
Sig.
89.824 a
1069.929
26.019
35.826
3
1
1
1
29.941
1069.929
26.019
35.826
8.524
304.592
7.407
10.199
.000
.000
.008
.002
23.310
323.165
28191.000
412.990
1
92
96
95
23.310
3.513
6.636
.012*
Chapter 4: Results
Limited Cross-sectional Statistical Analysis (Cont.)
Licensed CPA?/Transformational Leadership to Rules Ethical Climate
Source
Corrected Model
Intercept
CPA? (D9)
Transformational
CPA? (D9) *
Transformational
Error
Total
Corrected Total
Type III Sum
Of Squares
Mean
Square
df
99.567 a
813.263
27.149
91.979
3
1
1
1
33.189
813.263
27.149
91.979
23.876
346.083
30009.000
445.650
1
99
103
102
23.876
3.496
F
9.494
232.641
7.766
26.311
Sig.
.000
.000
.006
.000
6.830 .010**
Chapter 4: Results
Limited Cross-sectional Statistical Analysis (Cont.)
Firm Size/Transformational Leadership to Lawcode Ethical Climate
Category D11
(Firm Size)
Frequency
Regional
Local, large 25+
Local, small
Total
Source
Corrected Model
Intercept
Firm Size (D11)
Transformational
Firm Size (D11) *
Transformational
Error
Total
Corrected Total
32
50
20
102
Type III Sum
Of Squares
Mean
Square
df
F
Sig.
69.601 a
147.678
6.100
23.938
3
1
1
1
23.200
147.678
6.100
23.938
7.819
49.769
2.056
8.067
.000
.000
.155
.005
13.106
293.758
33269.000
363.359
1
99
103
102
13.106
2.967
4.417
.038*
Chapter 4: Results
Limited Cross-sectional Statistical Analysis (Cont.)
Licensed CPA?/Transactional Leadership to Rules Ethical Climate
Source
Corrected Model
Intercept
Transactional
CPA? (D9)
CPA? (D9) *
Transactional
Error
Total
Corrected Total
Type III Sum
Of Squares
Mean
Square
df
F
Sig.
32.366 a
684.151
19.079
20.518
3
1
1
1
10.789
684.151
19.079
20.518
2.584
163.885
4.570
4.915
.058
.000
.035
.029
17.359
413.284
30009.000
445.650
1
99
103
102
17.359
4.175
4.158
.044*
Chapter 4: Results
Limited Cross-sectional Statistical Analysis (Cont.)
Years with Firm/Lassiez-faire Leadership to Lawcode Ethical Climate
Category D7
(Years with
firm)
0–2
3–4
5 – 10
10+ years
Total
Source
Corrected Model
Intercept
LFL
Time with Firm (D7)
Time with Firm (D7) *
LFL
Error
Total
Corrected Total
Frequency
18
27
32
26
103
Type III Sum
Of Squares
df
Mean
Square
F
Sig.
66.219 a
5937.012
4.082
40.450
7
1
1
3
9.460
5937.012
4.082
13.483
3.024
1898.146
1.305
4.311
.006
.000
.256
.007
38.792
297.141
33269.000
363.359
3
95
103
102
12.931
3.128
4.134
.008**
Chapter 4: Results
Post Hoc Power and Effect Size Analysis
Post Hoc Power and Effect Size Analysis
Hypothesis
Post
(eta2)
Hoc
Effect
Alpha
P-value
df
Power
Size
H1, Transformational to Caring
.05
.000**
102
.92
.53
H1, Transformation to Lawcode
.05
.004*
102
.86
.54
H1, Transformation to Rules
.05
.000**
102
.93
.56
H1, Transformation to Instrumental
.05
.000**
102
.93
.56
H3, Laissez-faire to Rules
.05
.016*
102
.71
.18
H3, Laissez-faire to Instrumental
.05
.012*
102
.73
.17
H4, Understanding FSGO to Instrumental
.05
.048*
48
.51
.33
Chapter 5: Conclusions and Recommendations
Frequency Means of Leadership Recognized
Frequency Means of Leadership Style Recognized
Leadership Style
Mean
Std. Dev.
Transformational
Transactional
Laissez-faire
2.53
1.89
1.31
0.626
0.369
0.647
MLQ Frequency Key: 0.0 = Not at all, 1.0 – Once in a while,
2.0 = Sometimes, 3.0 = Fairly often, and 4.0 = Frequently, if not always
Chapter 5: Recommendations
Change Leadership Behavior and Attributes
Chapter 5: Conclusions and Recommendations
Limitations, Improvements, & Suggestions
• Improvements
– Inadequacy of the Transactional Leadership for
Ethical Climate Awareness
•
The independent variable, transactional leadership style, produced non-statistical results, with respect to the
impact of the subordinate’s perception of their ethical workplace climate. However, upon deeper correlation
analysis and ANOVA analysis, accepted leadership subscales of contingent reward and management-byexception active had statistical correlation and significance. Transactional leadership has, in previous
research, been problematic in accounting profession research.
•
In the future, perhaps some exploratory qualitative research can better understanding how transactional
leadership style’s subscales of contingent reward, management-by-exception—passive, and management-byexception—active, is present and utilized in the public accounting profession. Then a better quantitative
research conceptual model could be posited.
Chapter 5: Conclusions and Recommendations
Limitations, Improvements, & Suggestions
• Suggestions for Future Research
•
First, with appropriate corrections for the ECQ Survey instrument, this study can be replicated in
other professional public accounting jurisdictions. The accumulation of future replications can add to
the aggregating of a larger, robust sample, perhaps leading to a meta-analysis.
•
Second, better religiosity construct development can be pursued.
•
Third, further research opportunities. For example,
–
–
–
–
why in Utah do women’s employment percentages nearly shrink in half, over time?
Why do men represent a higher percentage in the accounting profession’s senior positions?
What are the social factors creating a “glass ceiling” effect in Utah’s public accounting profession?
Why does the public accounting profession continue to appear unattractive to minority persons?
•
Fourth, can better process-based management philosophies, with leadership training interventions,
further bend the Utah public accounting leadership culture more toward transformational
leadership, less towards transactional, and the eradication of laissez-faire leadership?
•
Fifth, could accounting firms that improve their transformational leadership practices,
–
–
heighten the subordinates’ perception to the more preferred ethical climate types (i.e., caring, lawcode, and
rules) ?
earn higher employee satisfaction, experience less professional staff turnover, and increase profitability?
References
Provided in the separate chapter PowerPoint presentations

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