The Impact of Accounting Education on Ethical Values: An Institutional Perspective

Abstract

The accounting scandals at the beginning of the 21st century led to public distrust and demands for reform. Were these scandals unexpected? From an old institutional economics (OIE) perspective, which originated with the work of Thorstein Veblen in the 1890s, these failures and the moral lapses should not be a surprise. OIE theorists, like critical theorists, generally, contend that corporate hegemony, i.e., the domination of business values in all areas of human life, has eroded moral sensitivities. All institutions, including our once-autonomous educational institutions, have become mechanisms for promoting economic interests. We first present a brief overview of institutional theory, to provide a theoretical framework for our subsequent experimental analysis. We discuss the concept of corporate hegemony and explain how hegemony impacts higher education, generally. We then examine efforts to commodify higher education and explain how that impacts all students in universities in the United States. Finally, we discuss the effect of commodification on accounting education to explain why we posit that our current accounting educational environment should be expected to desensitize students to the ethical aspects of their profession. This theoretical framework provides the basis for three hypotheses that we test in an experimental context to determine if accounting education desensitizes students to the moral aspects of their discipline. The experiment utilizes a capital budgeting context, which incorporates financial, social, and environmental factors. Subjects ranked and provided perceptions on eight alternatives as to their economic and moral content. Three groups of students, with differing levels of accounting knowledge, participated in the experiment. We develop hypotheses based on institutional theory and test those hypotheses in the latter part of this paper. Our results suggest that accounting education needs reform, so that accounting students become more aware of the ethical dimensions of our discipline.

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