Skip to Content

Heinz, Philip

View Philip's Profile
  • Paper Title: Some theoretical and methodological suggestions for studies examining earnings management and ethical judgments in accounting
  • Department Affiliation: Accounting & Corporate Governance
  • Supervisor's Names:
    • Professor Chris Patel
    • Mr. Andreas Hellmann


The objective of this paper is to provide some theoretical and methodological suggestions to guide future research on the controversial topic of earnings management and ethical judgments.


Some theoretical and methodological weaknesses of prior literature examining earnings management and ethical judgments are evaluated. One weakness is the extensive reliance on narrowly focused dimensions developed by Hofstede (1980) and operationalized in accounting by Gray (1988) without complementing research with relevant literature from other disciplines. A further theoretical weakness of prior literature is that it largely focused on earnings management and ethical judgments in the United States, often assuming that the findings are generalizable and transferable to other countries. Methodological weaknesses of prior literature include that ethical judgments are largely measured using a unidimensional scale and the failure to examine a "holier-than-thou" perception bias.

Key literature/theoretical perspective:

Key literature includes literature from accounting, sociology, psychology, and philosophy.


Review of selected studies examining earnings management and ethical judgments.


Two theoretical and two methodological suggestions emerge from the evaluation of prior literature. First, it is suggested to complement research with relevant literature from other disciplines. For example, literature from the realm of psychology could complement theory developments and hypotheses formulation by providing relevant insights into the influence of personality variables on an individual level. Second, given the importance of contextual factors such as political, economic and legal influences on ethical judgments, it is suggested that future research focus on nations with different contextual environments and on countries in which ethics is an underexplored topic. Third, it is suggested to apply a combination of undimensional and Multidimensional Ethics Measure (MEM) for sharper insights into ethical judgments. Fourth, this paper also recommends the measurement of an important issue in accounting contexts, namely the "holier-than-thou" perception bias.

Research limitations/implications:

A usual limitation of research based on literature review applies, namely that not all literature may be captured.

Practical and social implications:  

The theoretical and methodological suggestions in this paper contribute to accounting literature by providing useful guidance for research on earnings management and ethical judgments. The results will also be of interest to accounting professionals, accounting firms and accounting educators.


Earnings management, ethical judgments, theoretical and methodological suggestions.