Publication Type
Journal Article
Version
publishedVersion
Publication Date
12-2014
Abstract
Corporate governance mechanisms essentially reside in the control structure/systems of most organizations and provide, theoretically at least, a conduit to support a better organizational ethical climate. This linkage, however, has seldom been portrayed this way in the literature and, correspondingly, there are virtually no empirical studies to offer increased understanding, especially with respect to the professional accountant in practice. Accordingly, this paper empirically assesses the governance mechanisms sanctioned by the International Federation of Accountants (2009) as determinants of an organization’s ethical climate based on evidence from a Canadian sample of CFOs/controllers. The ethics/leadership literature relating to ethical climate provides the theoretical underpinnings while organizational contingency theory supports examining the moderating effects of perceived environmental uncertainty (PEU). Increases in corporate governance control mechanisms are found to positively influence ethical climate. A significant relationship persists under both low and high levels of PEU but, as expected, it is much stronger when the level of PEU is low – which raises concerns about how to embrace a stronger ethical climate when uncertainty is high. This paper contributes to the governance and ethics literature by providing empirical evidence that normative directives on evaluating and improving governance in organizations from global accounting authorities, such as the IFAC, are effective in shaping firms’ ethical climates in practice.
Keywords
Governance, Control Systems, Ethical Climate, Environmental Uncertainty
Discipline
Accounting | Business Law, Public Responsibility, and Ethics
Research Areas
Corporate Governance, Auditing and Risk Management
Publication
International Journal of Management and Information Systems
Volume
18
Issue
4
First Page
241
Last Page
260
ISSN
1546-5748
Identifier
10.19030/ijmis.v18i4.8833
Publisher
Clute Institute
Citation
WILLIAMS, John J. and SEAMAN, Alfred E..
Determinants of Ethical Climate in the Firm:The Role of Governance Systems and Environmental Uncertainty. (2014). International Journal of Management and Information Systems. 18, (4), 241-260.
Available at: https://ink.library.smu.edu.sg/soa_research/1275
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-Share Alike 4.0 International License.
Additional URL
https://doi.org/10.19030/ijmis.v18i4.8833