Managing Conflict of Interests in Professional Accounting Firms

Maria Ishaque

Research output: Thesis (awarded by external institution)Doctoral Thesis


This study views conflict of interests in professional accounting firms through the lens of behavioural risk management. The research problem driving this study is the accounting professionals’ deviant decision-making behaviour due to conflict of interests. Extant literature suggests that the prevalence of said problem is attributable to the ineffective management of conflicting interests – the existing procedures do not account, sufficiently, for the accounting professionals’ independence in fact. This research builds, primarily, on the work of Moore, Tanlu and Bazerman (2010) and Guiral, Rodgers, Ruiz and Gonzalo (2010). Although they attempted to address the professionals’ independence in fact by examining the psychological and cognitive impacts of conflict of interests, there still is a lack of understanding about the interaction of conflict of interests with decision-making. Consequently, there have been repeated calls for more research to understand how conflict of interests operates at the level of an individual accounting professional. Accordingly, this study is aimed at examining the process through which conflict of interests affects accounting professionals’ decision-making behaviour. To achieve this aim, a cognitive approach has been developed through integration of social cognitive theory and throughput model of decision-making. This research adopts a quantitative approach to investigation and the data have been collected by conducting a quasi-experiment with 105 professionals from the Big Four accounting firms in the UK. Likert-type items/scales are used to record data as the professionals’ self-reports on their perceptions and behaviour. Partial Least Squares-Path Analysis has been implemented for data analysis and hypotheses testing. Following the post-positivists stance, the concern is ‘failure to reject’ a hypothesis rather than ‘proving’ it. The empirical results provide that the professionals’ positive outcome expectancy of compliant decision-making (POE), perceived difficulty in making compliant decisions (PD) and ethical judgements (EJ) play mediating role in the relationship between conflict of interests (CoI) and the likelihood of deviant decision-making behaviour (DD). The low POE, high PD and less EJ are evidenced to be the situational cognitive predictors and the high propensity to morally disengage (PMD) the dispositional cognitive predictor of DD. Decision-making behaviour is evidenced to be prone to bias due to the significant role of POE and PD in the decision-making process. These results suggest that the process through which CoI affects accounting professionals’ decision-making behaviour is governed through the agency of their POE, PD and EJ. During this process, CoI plays biasing role and due to which the deviations from compliant behaviour might occur even undesirably. Therefore, DD is high in case of the professionals who perceive the negative outcomes of compliant decision-making to outweigh its positive outcomes, perceive high difficulty in making the given compliant decision, form a judgement that deviant decision choice is the most ethical and have high propensity of considering unethical behaviour as acceptable. Thus, in the events of conflict of interests, the likelihood of deviant behaviour can be reduced through encouraging amongst professionals the high POE, low PD, high EJ and low PMD. This study holds significance since it provides the much-needed empirical evidence for the role of accounting professionals’ cognitive processes in the relationship between conflict of interests and their decision-making behaviour. The cognitive approach adopted in this study provides a novel perspective for investigating the decision-making process. Moreover, the robust experiment employed for data collection adds to the extant research that lacks in experimental scenarios for addressing conflict of interests. Since all the insights revealed by this study’s results are relevant to the professionals’ state of mind, these insights can be combined to strengthen their independence in fact – to this end, I have proposed a behavioural framework to complement the accounting firms’ current efforts for managing conflict of interests. On a practical level, the professional accounting firms, the accounting professionals, the regulators and the other relevant professions can use this study’s findings and the new knowledge for making better decisions and to improve their policies.
Original languageEnglish
QualificationDoctor of Philosophy
Awarding Institution
  • Anglia Ruskin University
Award date1 Jan 2017
Publication statusPublished - 4 Oct 2017


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