PURPOSE OF THE ARTICLE The authors wrote this article to study the relative effects of threats of

1200 WordsApr 23, 20195 Pages
PURPOSE OF THE ARTICLE The authors wrote this article to study the relative effects of threats of incarceration, fines and professional censure on attitudes about committing financial statement fraud. It is important to consider that deterrence mechanisms are most effective in the context of financial statements fraud given that financial statement fraud is by far the most costly and difficult to detect. It causes a median loss of $4.1 million per incident and takes the longest to detect at an average of approximately 27 months (ACFE, 2010). Besides, financial statement fraud is also difficult to monitor and control because it is mostly committed by executives who have authority to override internal controls. Other factors such as…show more content…
The following are the procedures for policy capturing methodology: firstly, participants were asked to evaluate eight scenarios representing all possible combinations of the three sanctions. Then, each sanction was described as either present or absent. Thirdly, participants were asked a number of attitudinal questions about committing financial fraud in each of the eight cases. After responding to the eight scenarios, individuals answered questions assessing their perceptions about the certainty and severity of the potential sanctions. Finally, participants answered a number of questions related to potential control variables, explanatory factors and demographics. In this study, there are two samples be collected from MBA student (85 people) and financial professionals (77 people). MBA students are graduate students who have been shown to be reliable proxies for professionals in a number of studies on ethics and in other studies testing attitudes about fraud. While, all of the professionals were currently serving in an executive or supervisory capacity in an accounting or financial related field and 40 were serving in a Controller, CFO, or CEO capacity. Nonetheless Controllers, CFOs and CEOs are the primary force behind financial manipulation and earnings management. Each scenario consisted of a scheme where a manager misstated supplies expense and was

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