Effects of Auditors' Ethical Orientation and Self-Interest Independence Threat on the Mediating Role of Moral Intensity and Ethical Decision-Making Process

This study examines the effects of individual ethical orientation, independence threat (a contextual factor), and moral intensity on auditors’ ethical decision-making process using Jones's issue-contingent model of ethical decision-making in Malaysia. A quasi-experimental design was employed to test the proposed hypotheses formulated for this study. Using WarpPLS, results support the positive direct effects of the independence threats, ethical orientation, and moral intensity of auditors on their ethical decision-making process. Results also suggest that moral intensity mediates the relationships between the auditors’ ethical orientation as well as auditor self-interest threat on the auditors’ ethical decision-making. Auditors with strong ethical orientation relativism, as compared to idealism, demonstrate undesirable ethical decision-making processes. Furthermore, low moral intensity underscores the effectiveness of auditors’ decision-making due to low ethical sensitivity and hence leads to inappropriate ethical decision-making processes and behavior. This study puts forward an auditing perspective through which to understand the ethical dilemmas and the importance of auditors’ moral intensity and ethical orientation in decision-making skills.