The effects of religiosity on earnings management under obedience pressure

Mahmudi Mahmudi, Supriyadi Supriyadi


This paper examined the effect of obedience pressure on real earnings management. It also also investigated whether the relationship between obedience pressure and real earnings management is moderated by individual’s religiosity level. Religiosity is an individual believed as sources of ethical value that would normatively affect the management ethical decision. Prior studies have documented that management decision could be influenced by obedience pressure, however, there is limited study that specifically tested the effects of obedience pressure and religiosity on real earnings management. This study utilized a laboratory experiment with a 2 x 2 (obedience pressure x level of religiosity) factorial design involving 89 participants. This study found that individuals under obedience pressure were more likely to perform real earnings management than control group. However, religiosity did not significantly mitigate the association between obedience pressure and real earnings management. There is no significant effect of individual’s religiosity level on real earnings management decision.


Obedience Pressure, Religiosity, Earnings Management.

Full Text:



Asch, S. E., 1955. Opinions and social pressure. Scientific American, 193(5), 31-35.

Baird, J. E. and Zelin II, R. C., 2009. An examination of the impact of obedience pressure on perceptions of fraudulent acts and the likelihood of committing occupational fraud. Journal of Forensic Studies in Accounting and Business, Winter, 1-14.

Barnett, T., Bass, K. and Brown, G., 1996. Religiosity, ethical ideology and intentions to report a peer’s wrongdoing. Journal of Business Ethics, 15(11), 1161–1175.

Bishop, C. C., 2013. The impact of social influence pressure on CFO judgments. Dissertation., Coles College of Business Kennesaw State University.

Brehm, J. W. and Brehm, S. S., 1981. Psychological Reactance: A Theory of Freedom and Control. Academic Press, New York: NY.

Cohen, D. A. and Zarowin, P., 2010. Accrual-based and real earnings management activities around seasoned equity offerings. Journal of Accounting and Economics, 50(1), 2-19.

Conroy, S. J. and Emerson, T., 2004. Business ethics and religion: Religiosity as a predictor of ethical awareness among students. Journal of Business Ethics, 50, 383-396.

Cooper, M. J. and Pullig, C., 2013. I’m number one! Does narcissism impair ethical judgment even for the highly religious. Journal of Business Ethics, 112, 167-176.

Cornwall, M., Albrecht, S. L., Cunningham, P. H. and Pitcher, B. L., 1986. The dimensions of religiosity: A conceptual model with an empirical test. Review of Religious Research, 27(3), 226–244.

Davis, S., DeZoort, F. T., and Kopp, L. S., 2006. The effect of obedience pressure and perceived responsibility on management accountants’ creation of budgetary slack. Behavioral Research in Accounting, 18, 19–35.

DeZoort, F. T. and Lord, A. T., 1994. An investigation of obedience pressure effects on auditors’ judgments. Behavioral Research in Accounting, 6, 1-30.

DeZoort, F. T. and Lord, A. T., 1997. A review and synthesis of pressure effects research in accounting. Journal of Accounting Literature, 16, 28-85.

Dirsmith, M. W., and Covaleski, M. A., 1985. Informal communications, nonformal communications and mentoring in public accounting firms. Accounting, Organizations and Society, 10, 149–169.

Giacalone, R. A. and Jurkiewicz, C. L., 2003. Right from wrong: The influence of spirituality on perceptions of unethical business activities. Journal of Business Ethics, 46(1), 85–97.

Graham, J., Harvey, C. and Rajgopal, S., 2005. The economic implications of corporate financial reporting. Journal of Accounting and Economics, 40(1-3), 3–73.

Gunny, K. A., 2010. The relation between earnings management using real activities manipulation and future performance: Evidence from meeting earnings benchmarks. Contemporary Accounting Research, 27(3), 855–888.

Hartmann, F. G. H. and Maas, V. S., 2010. Why business unit controllers create budget slack: Involvement in management, social pressure, and Machiavellianism. Behavioral Research in Accounting, 22(2), 27-49.

Hegarty, W. H. and Sims, H. P., Jr., 1978. Some determinants of unethical decision behavior: An experiment. Journal of Applied Psychology, 63, 451-457.

Hegarty, W. H. and Sims, H. P., Jr., 1979. Organizational philosophy, policies and objectives related to unethical decision behavior: A laboratory experiment. Journal of Applied Psychology, 64, 331-338.

Kennedy, E. and Lawton, L., 1998. Religiousness and business ethics. Journal of Business Ethics, 17, 163-175.

Kidwell, J. M., Stevens, R. E., and Bethke, A. L., 1987. Differences in the ethical perceptions between male and female managers: Myth or reality. Journal of Business Ethics, 6, 489-493.

Kohlberg, L., 1984. The psychology of moral development: The nature and validity of moral stages. New York: Harper & Row.

Kurpis, L. V., Beqiri, M. S., and Helgeson, J. G., 2008. The effects of commitment to moral self-improvement and religiosity on ethics of business students. Journal of Business Ethics, 80, 447-463.

Lightner, S., Adams, S. and Lightner, K., 1982. The influence of situational, ethical and expectancy theory variables on accountants’ underreporting behavior. Auditing: A Journal of Practice & Theory, 2, 1–12.

Longenecker, J. G., McKinney, J. A., and Moore, C. W., 2004. Religious intensity, evangelical Christianity, and business ethics: An empirical study. Journal of Business Ethics, 55, 373–386.

Lord, A. T. and DeZoort, F. T., 2001. The impact of commitment and moral reasoning on auditors’ responses to social influence pressure. Accounting, Organizations and Society, 26, 215-235.

Lu, Xinyi., 2010. Local religiosity and earnings quality. Ph.D. Dissertation. The University of Texas at Dallas.

Mayhew, B. W., and Murphy, P. R. 2014. The impact of authority on reporting behavior, rationalization and affect”, Contemporary Accounting Research, 3(2), 420-443.

McGuire, S. T., Omer, T. C., and Sharp, N. Y., 2012. The impact of religion on financial reporting irregularities. The Accounting Review, 87(2), 645-673.

Merchant, K. A., 1989. Ethics test for everyday manager. Harvard Business Review: 220-221.

Milgram, S., 1974. Obedience to Authority. New York, NY: HarperCollins Publisher.

Ng, J., Whrite, G. P., Lee, A. and Monea, A., 2009. Design and validation of a novel new instrument for measuring the effect of moral intensity on accountants’ propensity to manage earnings. Journal of Business Ethics, 84, 367–387.

Parboteeah, K. P., Hoegl, M. and Cullen, J. B., 2008. Ethics and religion: An empirical test of a multidimensional model. Journal of Business Ethics, 80(2), 387–398.

Peterson, R., Albaum, G., Merunka, D., Munuera, J. and Smith, S., 2010. Effects of nationality, gender and religiosity on business related ethicality. Journal of Business Ethics, 96, 573-587.

Ponemon, L. A., 1992. Auditor underreporting of time and moral reasoning: An experimental-lab study. Contemporary Accounting Research, 9, 171–189.

Rachels, J. and Rachels, S., 2011. The Elements of Moral Philosophy, 7th ed., New York: McGraw-Hill.

Rest, J. R., 1986. Moral development: Advances in research and theory. New York, NY: Praeger.

Roychowdhury, S., 2006. Earnings management through real activities manipulation. Journal of Accounting and Economics, 42, 335-370.

Senger, J., 1970. The religious manager. Academy of Management Journal, 179-186.

Singhapakdi, A., Marta, J., Rallapalli, K. and Rao, C. P., 2000. Toward an understanding of religiousness and marketing ethics: An empirical study. Journal of Business Ethics, 27, 305-319.

Smith, R. E., Wheeler, G. and Diener, E., 1975. Faith without works: Jesus people, resistance to temptation, and altruism. Journal of Applied Social Psychology, 5, 320-330.

Terpstra, D. E., Rozell, E. J. and Robinson, R. K., 1993. The influence of personality and demographic variables on ethical decisions related to insider trading. The Journal of Psychology, 127(4), 375–389.

Tiliouine, H., Cummins, R. A., and Davern, M., 2009. Islamic religiosity, subjective well-being, and health. Mental Health, Religion & Culture, 12(1), 55-74.

Vitell, S. J., 2009. The role of religiosity in business and consumer ethics: A review of the literature. Journal of Business Ethics, 90, 155-167.

Weaver, G. R. and Agle, B. R., 2002. Religiosity and ethical behavior in organizations: A symbolic interactionist perspective. Academy of Management Review, 27(1), 77-97.

Wilhelm, W., 2012. Financial decision making: A study of board room decision making dynamics. Delta Pi Epsilon Journal, LIV(1), 27-40.

Zang, A. Y., 2012. Evidence on the trade-off between real activities manipulation and accrual-based earnings management. The Accounting Review, 87(2), 675-703.



  • There are currently no refbacks.

Copyright (c) 2019 Journal of Economics, Business & Accountancy Ventura

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

Abstracting & Indexing



Hasil gambar untuk ccbyncsa

Copyright @ 2010 Pusat Penelitian dan Pengabdian Masyarakat Sekolah Tinggi Ilmu Ekonomi (PPPM STIE)