Cognitive Moral Development, Organizational Situation and Ethical Decision Making in Business and Accounting

This study examines the effect of the interaction between cognitive moral development (pragmatic, accommodating,
and autonomous) and an organizational situation (agency and stewardship) in business ethical decision making
(earnings management and expropriation). This research employed a laboratory experiment design of full factorial
factor 3x2 between-within subjects. There were 97 postgraduate students of Hasanuddin University that acted as
participants. Data were analyzed by ANOVA and t-test. The results showed that the level of cognitive moral
development is positively related to the degree of ethical decisions in accounting and expropriation. The higher the
level of cognitive moral development, the more managers act ethically in decisions relating to accounting and
expropriation. Meanwhile, the agency and stewardship situation have no effect on the differences in ethical decision
making both in accounting and expropriation. Similarly, the exposure to an organizational situation has no impact on
the relationship between levels of cognitive moral development and ethical decision making. The assumption stating that cognitive moral development of each participant has been an anchor and not easily changed to the different or the opposite situations is empirically proven