Explaining Reductions in Professional Skepticism with Moral Disengagement

• In Event: Continental Breakfast & Research and Education Forum
  In Paper Session: Table 13: Fraud & Skepticism

Abstract

This study reports the results of two experiments that examine professional skepticism as a function of moral reasoning and agency—how individuals define standards and regulate behavior. Consistent with the theory of moral disengagement, the results suggest that common audit firm human resource practices used to promote audit quality (i.e. hiring creative individuals and advertising public accounting’s role as protecting the capital markets) may unintentionally decrease professional skepticism through increasing moral disengagement. Results of Experiment 1 demonstrate creative auditors are more skeptical. However, they are also more prone to engage in less skeptical behavior as they fabricate more creative moral justifications (a specific method of moral disengagement) when working under time pressure. Further, Experiment 2 suggests that moral disengagement is increased when firms frame their public interest responsibilities as protecting the ‘capital markets.’ The use of this label unintentionally dehumanizes the individuals that make up the public, and as a result, it decreases professional skepticism. Alternatively, altering the frame of the public interest responsibilities to protecting individuals (such as more familiar individual investors) increases humanization and increases professional skepticism.

Author

• Jared A Eutsler, University of North Texas