This week our research articles cover the implications of ethical and unethical accounting practices, and regulation.

Tax avoidance as a sustainability problem 
This manuscript proposes that tax avoidance can be better understood and mitigated as a sustainability problem. Tax avoidance is not just a financial problem for tax authorities, but one that erodes critical common spaces necessary for the smooth functioning of regulatory compliance, organisational integrity, and society.

Defining tax avoidance as a sustainability problem offers a broader and more holistic understanding of the organisational and societal consequences of tax avoidance behaviour. Sustainability is also a mature and legitimised concept that can readily incorporate taxation. A variety of established sustainability metrics have the capacity to incorporate anti-tax avoidance measures or publicise firms that engage in fair tax practices.

This manuscript concludes that integrating sustainability principles, in conjunction with important extant work on corporate social responsibility and taxation, can advance the goals of decreasing the occurrence and acceptability of tax avoidance.

Robert Bird and Karie Davis-Nozemack. 2018. Tax Avoidance as a Sustainability Problem. 
Journal of Business Ethics, 151(4), 1009–1025.


Is ethical blindness behind misleading accounting forecasts? 
The current financial reporting environment, with its increasing use of accounting estimates, including fair value estimates, suggests that unethical accounting estimates may be a growing concern.

This paper provides explanations and empirical evidence for why some types of accounting estimates in financial reporting may promote a form of ethical blindness. These types of ethical blindness can have an escalating effect that corrupts not only an individual or organisation but also the accounting profession and the public interest it serves.

Ethical blindness in the standards of professional accountants may be a factor in the extent of misreporting, and may have taken on new urgency as a result of the proposals to change the conceptual framework for financial reporting using international standards. The social consequences for users of financial statements can be huge.

The acquittal of former Nortel executives on fraud charges related to accounting manipulations is viewed by many as legitimizing accounting gamesmanship. This decision illustrates that the courts may not be the best place to deal with ethical reporting issues. The courts may be relied on for only the most egregious unethical conduct and, even then, the accounting profession is ill equipped to assist the legal system in prosecuting accounting fraud unless the standards have been clarified.

We argue that the problem of unethical reporting should be addressed by the accounting profession itself, preferably as a key part of the conceptual framework that supports accounting and auditing standards, and the codes of ethical conduct that underpin the professionalism of accountants.

Wally Smieliauskas, Kathryn Bewley, Ulfert Gronewold and Ulrich Menzefricke. 2018. Misleading Forecasts in Accounting Estimates: A Form of Ethical Blindness in Accounting Standards? 
Journal of Business Ethics, 152(2), 437–457.


Management accounting in ancient India 
The various forms of accounting practice have a long history. However, the focus of historical accounting scholarship examining premodern times has tended to be the genesis of double-entry book-keeping techniques. In particular, very few scholars have examined influences on the adoption of management accounting techniques in the ancient periods of India’s long history.

We respond to this lacuna by examining management accounting at an organisational level within an ancient and economically successful society, namely the Mauryan period (322–185 BC). The aim is to explore management accounting practices implicated in the enforcement of economic and ethical behaviour in the daily lives of Mauryan organisational actors.

Drawing on a translation of original records in the form of a collection of texts known as the Arthasastra (lit. the science of wealth), this paper explores the intended uses of management accounting and, in particular, controls to persuade organisational actors to adapt the values and norms of wealth generation within the boundaries of socially acceptable roles. Our contribution is to highlight the society-oriented role of management accounting within Mauryan organisations.

Vijaya Murthy and Jim Rooney. 2018. The Role of Management Accounting in Ancient India: Evidence from the Arthasastra. 
Journal of Business Ethics, 152(2), 323–341.


Sanctions under the AICPA code of professional conduct 
The American Institute of Certified Public Accountants (AICPA) monitors the misconduct of its members using the AICPA Code of Professional Conduct (CPC). To accomplish this task, the AICPA relies on various stakeholders to report known violations of its CPC.

We examine the full population of sanctions imposed by the AICPA on its members under its CPC from 2008–2013 to identify recent trends in the misconduct of accounting professionals. While we find that multiple stakeholders identify and report violations, we also find that the most common types of violations remain consistent with those reported in the 1990s.

Further, we develop a taxonomy based on prior accounting literature to determine whether the AICPA CPC is being enforced to defend the public interest and/or the private interests of the accounting profession. In contrast to prior studies, our results suggest that as the accounting profession emerges from a recession and period of intense public scrutiny, the AICPA CPC is largely being enforced to defend the public interest. This public interest focus was most pronounced during the recessionary years of 2008–2010, as evident from misconduct reported by parties such as the Internal Revenue Service, Securities and Exchange Commission, Public Company Accounting Oversight Board, and state boards of accountancy.

Although key stakeholders have recently focused on reporting misconduct that threatens the public interest, we believe there are still areas in need of improvement, especially around the level of detail provided in the AICPA’s sanction records. We propose some possible solutions to improve public transparency.

J. Gregory Jenkins, Velina Popova and Mark D. Sheldon. 2018. In Support of Public or Private Interests? An Examination of Sanctions Imposed Under the AICPA Code of Professional Conduct.
Journal of Business Ethics, 152(2), 523–549.


Whistleblowing intentions among public accountants in Indonesia 
Our study contributes by providing new insights into the relationship between the individual levels of the antecedents and how the intention of whistleblowing is moderated by perceived organisational support (POS), team norms (TNs), and perceived moral intensity (PMI).

In this paper, we argue that the intention of both internal and external whistleblowing depends on the individual-level antecedents

[attitudes toward whistleblowing, perceived behavioural control, independence commitment, personal responsibility for reporting, and personal cost of reporting (PCR)] and is moderated by POS, TNs, and PMI.

The findings confirm our predictions. Data were collected using an online survey on 256 Indonesian public accountants who worked in the audit firm affiliated with the Big 4 and non-Big 4. The results support the argument that all the antecedents of individual levels can improve the auditors’ intention to blow the whistle (internally and externally). The nature of the relationship is more complex than analysis by adding moderating variables using the Partial Least Squares-Structural Equation Modellfing approach.

We found that POS, TNs, and PMI can partially improve the relationship between the individual-level antecedents and whistleblowing intentions. These findings indicate that the POS, TNs, and PMI are a mechanism or that attribute is important in controlling behaviour.

Hengky Latan, Christian M. Ringle and Charbel Jose Chiappetta Jabbour. 2018. Whistleblowing Intentions Among Public Accountants in Indonesia: Testing for the Moderation Effects. 
Journal of Business Ethics, 152(2), 573–588.


Talk the talk or walk the walk? 
This study examines how ambiguity in corporate objectives affects managers’ choice between opposing sustainability and short-term profit goals. We test this question with an experiment in which we vary whether environmental sustainability is included explicitly (vs implicitly) as a strategic objective that is used for managers’ performance evaluations.

Findings show that managers increase (decrease) biodegradable production and correspondingly decrease (increase) short-term profit when environmental sustainability performance is explicitly (implicitly) incorporated within the company’s strategic objectives. Also, managers in the implicit incorporation group are more likely to decrease (increase) their biodegradable production when they learn that their counterparts within the firm have chosen to decrease (increase) biodegradable production in other product lines.

Further, managers in the explicit incorporation group have greater trust in senior management, and that trust mediates the negative relationship between incorporation ambiguity and the level of biodegradable production. The theoretical and practical implications of this study are discussed.

W. Eric Lee and Amy M. Hageman. 2018. Talk the Talk or Walk the Walk? An Examination of Sustainability Accounting Implementation. 
Journal of Business Ethics, 152(3), 725–739.