Effect of organizational ethical self-interest climate on unethical accounting behaviour with two different motivations in China: the moderating effect of Confucian ShiZhong Thinking

The study addresses how organizational ethical climates, particularly the organizational ethical self-interest climate (OESIC), influence unethical behaviour in the accounting field. Given the amplified consequences of unethical accounting behaviour (UAB) for organizations, the paper investigates whether OESIC promotes two distinct forms of UAB based on motivation: unethical pro-self accounting behaviour (UPSAB) and unethical pro-organizational accounting behaviour (UPOAB). Recognizing that individual differences shape responses to ethical climates, the authors consider Confucian ShiZhong Thinking (CSZ Thinking)—a characteristic ethical mindset in China—as a potential moderator. The research questions are: (1) Does OESIC promote UAB (UPSAB and UPOAB)? (2) Are the effects of OESIC different on UPSAB versus UPOAB? (3) Does CSZ Thinking moderate the relationship between OESIC and both types of UAB? The study contributes by distinguishing UAB types by motivation and by introducing CSZ Thinking as a moderator in the Chinese context.

The review covers: (1) Organizational Ethical Self-Interest Climate (OESIC) and consequences: OEC is members’ shared perception of ethical norms that guide judgement and behaviour. OESIC, widely found across organizations, emphasizes self-interest in decision-making and has been linked to negative outcomes, such as turnover intention, abusive supervision, poor payment discipline, and corruption. (2) Two types of UAB with different motivations: UPSAB (for personal gain) and UPOAB (to benefit the organization and its members). Both occur in accounting contexts, with examples from scandals such as Enron (UPSAB) and Xerox (UPOAB). UPOAB may be more common yet overlooked due to its ostensibly pro-organizational intent. (3) UAB and Confucian ShiZhong Thinking in China: Prior Chinese-context studies link ethical climate and professional conflicts, ethical judgements, and behaviours, with UAB forms such as earnings management, greenwashing, and decoupling. Confucianism, a pervasive cultural influence, shapes ethical perceptions and behaviours. ShiZhong (timely correction and the golden mean) embodies flexibility and situational appropriateness (Zhongyong), potentially affecting how individuals perceive and respond to OEC. The review identifies gaps: limited empirical work on OESIC’s impact in accounting, neglect of UPOAB relative to UPSAB, and limited integration of Confucian individual characteristics (CSZ Thinking) into the OESIC–UAB relationship.

Design: Cross-sectional questionnaire-based survey using situational simulations of UAB scenarios to examine how OESIC influences UAB (UPSAB and UPOAB) and whether CSZ Thinking moderates these effects. Sample and data collection: Convenience sampling via the accounting alumni network of a Chinese university. 304 responses collected; 258 valid after removing duplicates and partial completions. Respondents are accountants across China at various organizational levels. Participation was consensual, anonymous, and voluntary; IRB approval obtained. Sample characteristics: 63.6% female; majority with bachelor’s degree or above (97.67%). Positions mainly basic employees and first-line managers. Tenure varied widely across categories. Measures: - OESIC: Measured with the Ethical Climate Questionnaire (ECQ; Victor and Cullen, 1988). - CSZ Thinking: Items adapted from the Ethics Position Questionnaire (EPQ; Forsyth, 1980) reflecting flexibility/relativism in ethical principles (e.g., ethics vary by situation/society). - UAB: Two simulated contexts following Weber and Gerde (2011). Context 1 (false reimbursement of personal expenses) operationalizes UPSAB. Context 2 (smoothing profits via excessive inventory depreciation provisions) operationalizes UPOAB. - Scale format: 7-point Likert (1 = strongly disagree; 7 = strongly agree). - Controls: Gender, length of service, educational background, position. Analytic strategy: - Reliability/validity checks: Harman’s single-factor test, full collinearity VIFs (PLS-SEM), Cronbach’s alpha, composite reliability (CR), AVE, KMO, and factor loadings. - Hypothesis testing via OLS regression: Model (1): UPSAB = α1 + β1 OESIC + controls + ε1. Model (2): UPOAB = α2 + β2 OESIC + controls + ε2. Model (3): Di_UAB (UPOAB − predicted UPSAB) = α3 + β3 OESIC (unstandardized) + controls + ε3, to compare effect magnitudes (H2). Moderation models: Model (4): UPSAB = α4 + γ1 (OESIC×CSZ) + β4 OESIC + δ1 CSZ + controls + ε4. Model (5): UPOAB = α5 + γ2 (OESIC×CSZ) + β5 OESIC + δ2 CSZ + controls + ε5. - Interaction probing: Simple slopes and Johnson–Neyman technique to identify regions of significance across CSZ Thinking values.

Reliability and validity: Harman’s single-factor test showed the largest single factor explained 27.86% variance (CSZ Thinking), with cumulative variance 69.94%, suggesting no common method variance (CMV). Full collinearity tests showed VIF < 3.3 for all constructs. Internal consistency and construct reliability were acceptable (e.g., Cronbach’s alpha > 0.70; CR > 0.60). Although AVE for CSZ Thinking was below 0.5, convergent validity deemed adequate given CR > 0.6. Descriptive statistics and correlations (N = 258): Mean OESIC = 4.77 (SD = 1.13); Mean CSZ Thinking = 4.74 (SD = 0.83); Mean UPSAB = 3.79 (SD = 1.70); Mean UPOAB = 4.07 (SD = 1.80). OESIC correlated positively with UPSAB (r = 0.263, p < 0.01) and UPOAB (r = 0.157, p < 0.05). UPSAB and UPOAB were strongly correlated (r = 0.664, p < 0.01). Hypothesis tests: - H1 (OESIC → UAB): Supported. OESIC positively predicted both UPSAB and UPOAB. Model 1 (DV: UPSAB): β1 = 0.356, t = 4.154, p < 0.001; Adj R2 = 0.172; F = 11.691, p < 0.01. Model 2 (DV: UPOAB): β2 = 0.242, t = 2.474, p < 0.05; Adj R2 = 0.065; F = 3.527, p < 0.01. Notable controls: Male gender associated with higher UAB (e.g., UPSAB: β = 0.954, t = 4.519, p < 0.01; UPOAB: β = 0.730, t = 3.040, p < 0.01). Higher educational background positively associated with UPSAB (β = 0.810, t = 4.498, p < 0.01). - H2 (Differential effect): Supported H2a. OESIC promotes UPSAB more than UPOAB. Model 3 (DV: UPOAB − predicted UPSAB): β3 = −0.243, t = −2.489, p < 0.05; Adj R2 = 0.105; F = 7.060, p < 0.01. - H3 (Moderation by CSZ Thinking): Supported. CSZ Thinking weakens the positive effect of OESIC on both UPSAB and UPOAB. Model 4 (DV: UPSAB): Interaction γ1 = −0.372, t = −3.806, p < 0.001; main effects OESIC β4 = 2.211, t = 4.471, p < 0.001; CSZ β = 1.840, t = 3.949, p < 0.001; R2 = 0.215; F = 11.031, p < 0.01. Model 5 (DV: UPOAB): Interaction γ2 = −0.291, t = −2.586, p = 0.01; main effects OESIC β5 = 1.692, t = 2.971, p < 0.01; CSZ β = 1.560, t = 2.907, p < 0.01; R2 = 0.099; F = 3.932, p < 0.01. Simple slopes and Johnson–Neyman probing indicated the OESIC–UAB association is stronger and more often significant at lower and average levels of CSZ Thinking, and weak/non-significant at higher CSZ Thinking, consistent with a buffering (negative) moderation effect. Overall, OESIC has a stronger effect on UPSAB than on UPOAB.

The findings extend organizational ethical climate research into the accounting domain by demonstrating that an egoistic ethical climate (OESIC) increases both self-serving (UPSAB) and pro-organizational (UPOAB) unethical accounting behaviours. Consistent with social cognitive theory, employees internalize and learn from perceived ethical norms; under OESIC, self-interest norms foster UPSAB more directly, while UPOAB can be rationalized via moral disengagement and alignment of personal with organizational interests. Distinguishing UAB by motivation clarifies that OESIC’s effect is stronger on UPSAB than UPOAB. Moreover, individual differences grounded in Confucian culture matter: CSZ Thinking, reflecting flexible, situational ethical reasoning, attenuates the influence of an egoistic ethical climate on unethical behaviour. The study underscores the interplay between informal ethical systems (ethical climate) and individual ethical orientations in shaping (un)ethical accounting behaviour and provides insights for managers to cultivate ethical climates and consider cultural-ethical traits when designing interventions. Practical implications include leveraging informal control systems to curb UAB, recognizing and addressing UPOAB despite its pro-organizational veneer, and valuing higher CSZ Thinking as a potential buffer against unethical conduct in egoistic climates.

The study shows that Organizational Ethical Self-Interest Climate (OESIC) positively relates to Unethical Accounting Behaviour (UAB) in China and that this effect is stronger for Unethical Pro-Self Accounting Behaviour (UPSAB) than for Unethical Pro-Organizational Accounting Behaviour (UPOAB). Confucian ShiZhong Thinking (CSZ Thinking) weakens the positive impact of OESIC on both types of UAB. These insights suggest that managers can restrain UAB by reducing perceptions of OESIC and fostering CSZ Thinking among accountants. Although centered on Chinese culture, the findings may be informative for other Confucian-influenced contexts.

Key limitations include: (1) Focus on OESIC and two UAB types without examining mediating mechanisms; future research could assess mediators such as moral disengagement and explore additional organizational factors (e.g., leadership, internal controls) influencing UPSAB and UPOAB. (2) Cross-sectional, self-reported data from Chinese accountants, raising generalizability concerns and potential CMV despite tests; future studies could adopt multi-source or longitudinal designs. (3) Cultural specificity: The moderating construct (CSZ Thinking) is rooted in Confucianism; results may differ in non-Confucian contexts. Comparative cross-cultural studies are needed to assess universality and boundary conditions.