The Role of Moral Reasoning on the Effects of Incentive Schemes and Working Relationships on Whistleblowing: An Audit Experimental Study

  • Supriyadi Supriyadi Universitas Gadjah Mada
  • Nidaul Uswah Prasetyaningsih Universitas Gadjah Mada
Keywords: moral reasoning, incentive scheme, working relationship, accounting fraud, whistleblowing

Abstract

This study examines the role of moral reasoning in strengthening the working relationship and incentive schemes on the likelihood of reporting accounting fraud. This study predicts that higher moral reasoning or being exposed to incentive schemes are more likely to cause someone to be a whistleblower. However, individuals with a close working relationship with wrongdoers will exhibit a lower propensity to blow the whistle than those with no close working relationship. Finally, moral reasoning is expected to interact with working relationships and incentive schemes to affect the propensity to blow the whistle. Based on a lab-experiment with 147 participants, this study documents that the simple effect of moral reasoning, the working relationship, or an incentive scheme is (marginally) significant. Similarly, the combination of moral reasoning and the working relationship significantly improves the tendency to blow the whistle. However, the combined effects of moral reasoning vs. the working relationship and moral reasoning vs. the working relationship vs. incentive scheme are not significant. This paper confirms previous studies which found that moral reasoning significantly alters the whistleblowing intention but that the impact of moral reasoning is not robust for incentive schemes and working relationships. Some limitations should be considered, namely the textual scenarios of the experimental design, working experiences, and the omission of personal orientation and the personal cost of reporting.

Author Biographies

Supriyadi Supriyadi, Universitas Gadjah Mada

Supriyadi, Supriyadi is an Associate Professor at Department of Accountancy, Faculty of Economics and Business, Universitas Gadjah Mada. He earned his Bachelor (Drs., 1988) in Accounting from Universitas Gadjah Mada, Master of Science in Accounting (M.Sc., 1993) from California State University at Fresno, USA, and Doctor in Accounting (Ph.D., 1998) from University of Kentucky, USA. His research interest is in the areas of business ethics, auditing, managerial accounting, taxation, and behavioral accounting. He has publication in GamaIJB, University of the Thai Chamber of Commerce (UTCC) International Journal of Business and Economics, Journal of Economics Business & Accountancy, Global Journal of Business Research, DLSU Business & Economics Review, International Journal of Economics and Accounting, Journal of Accounting & Taxation, Journal of Indonesian Economy and Business, Jurnal Akuntansi dan Keuangan Indonesia, Ekuitas: Jurnal Ekonomi dan Keuangan, Asian Review of Accounting, The Indonesian Journal of Accounting Research, Jurnal OptimumJournal of Global Business Advancement, Asia-Pacific Journal of Accounting & Economics, Journal of Economics Business and Accountancy Ventura, Review of Integrative Business and Economics Research, and Asian Journal of Business Ethics.

Author’s contact detail: Department of Accountancy, Faculty of Economics & Business, Universitas Gadjah Mada, Jl. Sosiohumaniora 1, Bulaksumur, Yogyakarta, Indonesia; phone +62 274 8112 52488; email: pri@ugm.ac.id

Nidaul Uswah Prasetyaningsih, Universitas Gadjah Mada

Prasetyaningsih, Nidaul Uswah, was a research assistant at the Department of Accounting, Faculty of Economics and Business, Universitas Gadjah Mada. She earned her M.Sc. (2013) in Business Administration from Jönköping International Business School, and her S.E. (2010) in Accounting from Universitas Gadjah Mada. Prasetyaningsih’s research interest is on the field of corporate transparency and governance. Her research on Islamic Corporate Identity was published in the Review of Islamic Economics, Finance, and Banking.

Author’s contact detail: Jl. Kalimantan No. 13, Widoro Baru, Condong Catur, Sleman, Yogyakarta 55283; Phone number: +62 274 817 7609 9697 ; e-mail: andprasetya@gmail.com

References

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Published
2021-06-29
How to Cite
Supriyadi, S., & Prasetyaningsih, N. U. (2021). The Role of Moral Reasoning on the Effects of Incentive Schemes and Working Relationships on Whistleblowing: An Audit Experimental Study. Gadjah Mada International Journal of Business, 23(3), 215-236. Retrieved from https://journal.ugm.ac.id/v3/gamaijb/article/view/15753