Research in ethics and economic behavior in accounting

Guest Editorial

Journal of Accounting and Public Policy 18 (1999) 335-338 

Frances L. Ayres, Dipankar Ghosh

Important in recent years. To promote ethical behavior organizations have used techniques such as ethics hotlines, code of ethics, appointed ethics officers, and undertaken other ways of encouraging ethical behavior (Morf et al., 1999, especially pp. 265, 269).

Professional norms in tax practice also have significant ethical dimensions. The widely accepted view among accountants is that, while tax evasion is unethical, tax avoidance is expected and is considered a building block of sound tax planning. The problem lies in determining where one ends and the other begins. For example, we have heard comments that suggest that officials of large corporations view their tax return as a first offer, and spend years negotiating with the Internal Revenue Service to reach final settlements on their tax returns.

Despite the increasing interest in ethics among the business community, and the significant cost to shareholders of lapses in ethics, ethics-related academic research in accounting has been limited. In large part, we feel this stems from a research paradigm focusing on descriptive as opposed to prescriptive research, in addition to a belief that ethical issues are not conducive to economic modeling or empirical research. A notable exception is a paper by Eric Noreen (1988, pp. 363-364) in which he argues that ethical behavior can coincide with maximization of economic welfare. He (1988, pp. 363-364) focuses on ethical behavior as a utilitarian concept, and argues that efficient economic exchange is facilitated by voluntary compliance with a set of mutually agreed upon rules of behavior. Compliance is encouraged by cultural expectations that are expressed as a part of religion, behavior norms (conscience), and even biological survival (see Noreen, 1988, pp. 364-369). Codes of ethics also serve as a means of encouraging and describing ethical behavior (Loeb 1971, p. 4; 1984, p. 53).

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