by Jeffrey N. Barnes, CPA, MAcc Oral Defense Slides in Partial Fulfillment

1. Organizational Leadership and Ethical Climate in Utah’s Certified Public Accounting Profession(20-minute Presentation Slides) by Jeffrey N. Barnes, CPA, MAcc Oral Defense Slides in Partial Fulfillment of Requirements for the Degree Doctor of Business Administration UNIVERSITY OF PHOENIX February 2013

2. Chapter 1, Introduction • CPAs are critically involved with assuring fair presentation of financial statements. • Fraudulent financial reporting continues(Arens, Elder, & Beasley, 2012; Apostolou & Crumbley, 2007). • Foundations of fraudulent behavior are rooted in sociological, psychological, and moral-development theories (Albrecht, Romney, Cherrington & Roe, 1982).

3. Chapter 1, IntroductionSignificance of the Problem • Accounting profession to benefit from the study by, • understanding current state of organizational leadership, • finding confirmatory or disconfirmatory evidence that leadership correlates to ethical perceptions, • determining if religiosity and regulatory influence relate to leadership and ethical climate perceptions, and • designing leadership training interventions.

4. Chapter 1, IntroductionOverview of the Research Design • H10: A leaders’ transformational leadership style does not relate to the subordinate’s perception of the firm’s ethical climate in Utah. • H20: A leaders’ transactional leadership style does not relate to the subordinate’s perception of the firm’s ethical climate in Utah. • H30: A leaders’ laissez-faire leadership style does not relate to the subordinate’s perception of the firm’s ethical climate in Utah.

5. Chapter 1, IntroductionOverview of the Research Design • H40: Known exogenous regulatory/punishment factors, as perceived by subordinates, do not relate to the subordinate’s perception of the firm’s ethical climate and immediate leadership in Utah. • H50: The degree of service or church attendance does not relate to the subordinates’ perception of the firm’s ethical climate and immediate leadership in Utah. • Alternate hypotheses, for each of the null hypotheses, suggest that relationships exists

6. Chapter 1, IntroductionOverview of the Research Design

7. Chapter 2, Review of LiteratureIntroduction • The current study, • explains previous research related to leadership and ethical climate, which is sparse in the accounting profession, • provides secondary evidence regarding regulatory controlling subordinate effect, and • provides secondary evidence regarding the nascent emerging positive subordinate effects of religiosity.

8. Chapter 2, Review of LiteratureDocumentation

9. Chapter 2, Review of LiteratureSummary • Both the lack of empirical research into the public accounting profession and the possible insights correlative influence these two moderating variables could provide and substantiate the additional needed empirical studies regarding the current state of accounting firms’ ethical climate structure and the prevailing leadership style typically exhibited.

10. Chapter 2, Review of LiteratureSummary • An organization’s ethical climate, is founded on the collective foundation of it individuals moral and ethics philosophies. These moral and ethical philosophies are related to the five empirically derived ethical climate types found within organizations. • Organizational leadership shapes and is shaped by the organization’s ethical climate. Potentially affecting the public accountants’ perceptions of organizational leadership and ethical climate are two potential moderating variables, which are awareness of regulatory statutes and personal religiosity, respectively.

11. Chapter 3: MethodTheoretical Model Design

12. Chapter 3: MethodInstrumentation • Four instruments were used in this research study, the • Multifactor Leadership Questionnaire (MLQ), or standard MLQ, or also known as the MLQ 5X short, by Avolio and Bass (2004), • Ethical Climate Questionnaire (ECQ), by Victor and Cullen (1987, 1988), • Understanding of Federal Sentencing Guidelines for Organizations, by researcher (2012), and • Religiosity, by researcher (2012).

13. Chapter 3: MethodPopulation • In 2010, approximately 1,175 certified public accountants (CPAs), in the practice of public accounting, in the State of Utah and members of the Utah Association of Certified Public Accountants (UACPA, 2009). • There were 469 separate physical CPA firm offices in Utah at the time of the study, many with below five CPAs. Of the 469 firms, only 41 firms with five or more CPAs exist(UACPA, 2009). • 11 CPA firms provided written permission to contact organization personnel, via email, for the administration of the electronic survey of this researchstudy.

14. Chapter 3: MethodData Collection (Cont.) • The original request was sent on February 7, 2012, the second request was sent on February 18, 2012, and the third and last request was sent March 13, 2012. • The 257 email addresses, at the time the survey was administered, there was provided236 continuing valid prospective respondents. The reduction of 21 emails represented natural attrition from the firms. The number of survey participants was 103 from a target population of 236, providing a 43.6% response rate.

15. Chapter 3: MethodResearcher Error with ECQ Instrument (Cont.)

16. Chapter 3: MethodResearcher Error with ECQ Instrument (Cont.) • According to Bart Victor, Ph.D. (personal communication, August 2, 2012), who is one the originators of the Ethical Climate Questionnaire (Victor and Cullen, 1988), this study’s collected data would expect to still be meaningful. He provided the following guidance, . . . the data collection need not be reperformed; to address the scale error in the ‘Methods’ section of the dissertation; to state that the existing data means, variances, and correlations are meaningful and reportable; to suggest that the scale errors do not cause a systemic or universal disqualifying error, because the recorded survey respondents’ impressions about the perceived ethical climate types are still valid; to not transform the data, thus, to use the existing data as is; and to check for similar intercorrelations and reliability.

17. Chapter 3: MethodCorrelation Analysis

18. Chapter 3: MethodANOVA Analysis • Prior to running the ANOVA analyses, assumptions for ANOVA were tested. The assumptions for normality were tested, which ascertain that the scores be normally distribution around the mean of the dependent variable. Histograms were developed for all the dependent variable ethical climate types. • Also tested was the homogeneity of variance, which requires that the groups have equal variances in the population. Scatterplots of dependent variable’s various ethical climate types were constructed to determine the absence of heteroscedasticity. Both histograms and scatterplot tests were performed visually.

19. Chapter 3: MethodANOVA Analysis (Cont.) • ANOVA analysis was performed for those correlative relationships with statistical significance. ANOVA or analysis of variance provided theF-critstatistic (F-test, F) ,R2, and significance.

20. Chapter 3: MethodUnivariate Analysis • Statistical analysis also treated the demographic categories, with sufficient subsample size, as independent variables. • Running univariate analysis of variances between the demographic independent variable and the leadership independent variable to the ethical climate’s dependent variables was performed. Those relationships that demonstrated significant relationships were reported

21. Chapter 4: ResultsStatistical Analyses • Findings for Hypothesis 1—Transformational Leadership’s Relationship to Ethical Climates • Findings for Hypothesis 2—Transactional Leadership’s Relationships to Ethical Climates • Findings for Hypothesis 3—Laissez-faire Leadership’s Relationships to Ethical Climates • Findings for Hypothesis 4—Regulatory Influence Relationships to Leadership and Ethical Climates • Findings for Hypothesis 5—Religiosity’s Relationships to Leadership and Ethical Climates • Limited Cross-sectional Statistical Analysis • Post Hoc Power and Effect Size Analysis

22. Chapter 4: ResultsFindings for Hypothesis 1--Correlations

23. Chapter 4: ResultsFindings for Hypothesis 1--ANOVA Transformation Leadership to Caring Ethical Climate • Transformation Leadership to • LawcodeEthical Climate • Transformation Leadership to • RulesEthical Climate • Transformation Leadership to • Instrumental Ethical Climate

24. Chapter 4: ResultsFindings for Hypothesis 2--Correlations

25. Chapter 4: ResultsFindings for Hypothesis 3--Correlations

26. Chapter 4: ResultsFindings for Hypothesis 3--ANOVA • Laissez-faire Leadership to • RulesEthical Climate • Laissez-faire Leadership to • InstrumentalEthical Climate

27. Chapter 4: ResultsFindings for Hypothesis 4—Correlations

28. Chapter 4: ResultsFindings for Hypothesis 5--Correlations

29. Chapter 4: ResultsCross-sectional Analyses • To understand the significant interaction between gender (or with any other demographic independent variable), and transformational leadership (or any other independent variable), on the caring ethical climate type perception (or any other dependent variable), the transformational leadership (or any other independent variable) was grouped into those scoring higher than one standard deviation (+1SD) and those scoring lower than one standard deviation (-1SD) and plotted with gender (or with any other demographic independent variable).

30. Chapter 4: ResultsLimited Cross-sectional Statistical AnalysisGender/Transformational Leadership to Caring Ethical Climate

31. Chapter 4: ResultsLimited Cross-sectional Statistical Analysis (Cont.)Service Function/Transformational Leadership to Lawcode Ethical Climate

32. Chapter 4: ResultsLimited Cross-sectional Statistical Analysis (Cont.)Service Function/Transformational Leadership to Rules Ethical Climate

33. Chapter 4: ResultsLimited Cross-sectional Statistical Analysis (Cont.)Licensed CPA?/Transformational Leadership to Rules Ethical Climate

34. Chapter 4: ResultsLimited Cross-sectional Statistical Analysis (Cont.)Firm Size/Transformational Leadership to Lawcode Ethical Climate

35. Chapter 4: ResultsLimited Cross-sectional Statistical Analysis (Cont.)Licensed CPA?/Transactional Leadership to Rules Ethical Climate

36. Chapter 4: ResultsLimited Cross-sectional Statistical Analysis (Cont.)Years with Firm/Lassiez-faire Leadership to Lawcode Ethical Climate

37. Chapter 4: ResultsPost Hoc Power and Effect Size Analysis Post Hoc Power and Effect Size Analysis

38. Chapter 5: Conclusions and RecommendationsFrequency Means of Leadership Recognized MLQ Frequency Key: 0.0 = Not at all, 1.0 – Once in a while, 2.0 = Sometimes, 3.0 = Fairly often, and 4.0 = Frequently, if not always

39. Chapter 5: RecommendationsChange Leadership Behavior and Attributes

40. Chapter 5: Conclusions and Recommendations Limitations, Improvements, & Suggestions • Improvements • Inadequacy of the Transactional Leadership for Ethical Climate Awareness • The independent variable, transactional leadership style, produced non-statistical results, with respect to the impact of the subordinate’s perception of their ethical workplace climate. However, upon deeper correlation analysis and ANOVA analysis, accepted leadership subscales of contingent reward and management-by-exception active had statistical correlation and significance. Transactional leadership has, in previous research, been problematic in accounting profession research. • In the future, perhaps some exploratory qualitative research can better understanding how transactional leadership style’s subscales of contingent reward, management-by-exception—passive, and management-by-exception—active, is present and utilized in the public accounting profession. Then a better quantitative research conceptual model could be posited.

41. Chapter 5: Conclusions and Recommendations Limitations, Improvements, & Suggestions • Suggestions for Future Research • First, with appropriate corrections for the ECQ Survey instrument, this study can be replicated in other professional public accounting jurisdictions. The accumulation of future replications can add to the aggregating of a larger, robust sample, perhaps leading to a meta-analysis. • Second,better religiosity construct development can be pursued. • Third, further research opportunities. For example, • why in Utah do women’s employment percentages nearly shrink in half, over time? • Why do men represent a higher percentage in the accounting profession’s senior positions? • What are the social factors creating a “glass ceiling” effect in Utah’s public accounting profession? • Why does the public accounting profession continue to appear unattractive to minority persons? • Fourth, can better process-based management philosophies, with leadership training interventions, further bend the Utah public accounting leadership culture more toward transformational leadership, less towards transactional, and the eradication of laissez-faire leadership? • Fifth, could accounting firms that improve their transformational leadership practices, • heighten the subordinates’ perception to the more preferred ethical climate types (i.e., caring, lawcode, and rules) ? • earn higher employee satisfaction, experience less professional staff turnover, and increase profitability?

42. References Provided in the separate chapter PowerPoint presentations