Determinants of Canadian accounting practitioners' ethical perceptions on earnings management

The collapses of Enron, WorldCom, and Arthur Andersen have raised a growing concern about earnings management (EM) ethics. These accounting scandals have damaged stakeholders' overall confidence and trust in the accounting profession. The academic community has responded with extensive research into American EM ethics but little is known about Canadian ethical values on perceptions of EM. This project focused on Canadian perspectives and surveyed 175 accounting students from two business schools in British Columbia to determine whether ethical ideologies and individuals' characteristics influence decision-making about EM ethics. Empirical results partially supported hypothesized direct effects for idealism, relativism, Machiavellianism, and locus of control. However, an intriguing finding is that EM ethics was also inversely related to Machiavellianism this reverse relationship contradicts both hypothesized direction and previous research. This discovery may mitigate the sole negative image of Machiavellianism and render the reverse relationship between Machiavellianism and EM ethics possible and sustainable.