Accounting's Role in the Ethical Behavior of Management

Abstract

Within business there are many debates over the ethical behavior that managers employ when making business decisions. There are many decisions made every day that question ethical codes of conduct. Though some actions may be legal, they may not necessarily be ethical. This paper delves deeper into this ethical debate of management’s behavior within organizations. It explains how accounting is used to influence the ethical behavior of management. Even accounting standards and regulations do not encompass all ethical decision making within an organization. Some decisions are entirely based on ethics and what a company deems appropriate. This paper takes the ideas of earnings management and agency theory and determines how they affect the ethical decision making of management. This paper explores the background of accounting and how company culture, agency theory, and fraud affect the ethical behavior of management within a company.