Professional Ethics: Business Students'
Davis
Perceptions
ABSTRACT. Professional ethics, a contemporary topic of
conversation among business professionals, is discussed using
the perceptions of college business students as the focal
point. This research relates to the issues of college instruc-
tion in professional ethics, differences in perceptions of
ethical behavior attributed to gender, and whether or not
students' perceptions of ethical behavior can be modified.
After presenting a review of the more important historical
developments and research related to professional ethics, this
paper focuses on the results of a study that compared a set of
ethical responses of various groups of college students with
each other. The results of hypotheses testing show an ethics
maturation process from students' initial exposure to busi-
ness courses through the graduate level. These tests also
show that formal ethics training, i.e., a separate professional
ethics course or unit is an existing course, is not a significant
factor in this process. However, one may conclude that the
students' perceptions of proper ethical behavior matures
toward society's expectations during college life.
Recently, professional ethics and ethical behavior
have become topics of renewed interest to the
business community. There have been numerous
reports, professional meetings, and journal articles
James R. Davis is a Professor of Accountancy at Clemson University.
He has published articles on professional ethics and made several
presentations on the subject at professional meetings. Currently he
is evaluating the different attitudes toward professional ethics of
students in different international environments.
Ralph E. Welton, Jr. is an Associate Professor of Accounting at
Clemson University. He teaches a graduate course on the
accounting environment which includes units on professional
ethics and legal responsibilities of accounting professionals. His
research interests include comparative international perceptions of
business ethics and the individual's longitudinal ethics develop-
ment.
Journal of Business Ethics 10:451-463, 1991.
© 1991 KluwerAcademic Publishers. Printed in the Netherlands.
James R.
Ralph E. Wehon
dealing with the topic and its importance to both
business and government. Various colleges are at-
tempting to expose their students to ethical concepts
through separate courses, modules in existing
courses, and special seminars and presentations. A
recent study of 144 schools revealed that 40% of
them were offering a business ethics course in 1988,
an increase from 20% in 1979 (Cohen and Pant,
1989). Professional organizations are offering semi-
nars, workshops, and self-study courses devoted to
ethics.
Part of the long-term solution to improving
professional ethics is to address the area as it relates
to educating future business professionals, i.e., col-
lege students. After reviewing and evaluating some
of the historical developments related to professional
ethics, this paper presents the results of a study that
compared various groups of college students' per-
ceptions of ethical behavior.
These student groups included beginning business
students, upper division business students, and
graduage business students. Our hypothesis testing
was designed to evaluate maturation from beginning
business education through graduate level and to
evaluate the impact of formal ethics training and
gender on perceptions of ethical behavior.
Historical perspective of ethics development
and education
Three educational ideologies have been used to
explain students' moral and ethical development.
Kohlberg and Mayer extrapolated from these three
ideologies appropriate applications of the best way to
set the goals, content and methods of education.
They also identified the ethical assumptions of each
ideology in their analysis. These ideologies, as sum-
452 James R. Davis and Ralph E. Welton,Jr.
marized by Kohlberg and Mayer (1972), are as
follows:
• Maturationism is contemporarily represented
in the ideas of Freud and Gesell. This ideology
stresses that what is most important in the de-
velopment of a person is what comes from
within and that the pedagogical environment
should create a permissive climate to allow
inner qualities to unfold and permit the inner
"good" to overcome the inner "bad" without
cultural pressures to dictate right and wrong.
• Environmentalism (cultural transmission) is
represented by the works of John Locke, J. B.
Watson, and B. F. Skinner. This approach
stresses that the learning of cognitive and
moral knowledge (gained through perception,
reasoning, or intuition) and society's rules are
the important factors in human development.
The education process should direct its efforts
to the instruction of such information and
rules.
• Interactionalism (cognitive-development) is
based on the work of Dewey and Piaget. The
premise of this ideology is that a person's
cognitive and emotional make-up emerge
naturally from interactions. Interactions allow
the cognitive processes to emerge through a
process of development that is neither direct
biological maturation nor direct learning, but
is a reorganization of psychological structures
resulting from organismic-environmental in-
teractions. Dewey and Piaget disregard both
die maturationist and environmentalist views.
After extensive study and research of these ideo-
logies, Kohlberg and Mayer concluded that only an
aggressive approach using cognitive-development
theory could satisfactorily achieve the proper educa-
tional results.
In recent years four approaches have been devel-
oped for the teaching of values development (ethics
and moral education). These approaches evolved
from the three ideologies discussed above. Each
approach differs in philosophy, application and
method of addressing the goals of values develop-
ment. Although our research study was adapted
primarily to the Moral Development approach, with
limited Values Transmission analysis, all four are
summarized for perspective.
• Moral Development attempts to stimulate
students to think about moral issues and to
examine the implications of moral problems
using reason. This approach is generally cred-
ited to the work of Kohlberg (1973) as a result
of his research that demonstrated that individ-
uals are stimulated to develop increasingly
sophisticated levels of moral judgment as they
engage in thoughtful consideration of moral
issues.
• Values Transmission applies the ideas of the
environmentalist approach above, along with
the research of Superka (1976), and is one of
the most extensively used approaches in ethics
education. This approach attempts to instill in
students certain values (standards or rules of
behavior) which are considered desirable for
society and emphasizes the transmission of
these values to the student.
• Values Clarification focuses on helping stu-
dents use rational thinking and emotional
awareness to clarify personal values. This is a
self-examination approach that does not force
direct value transmission. The student is left to
develop his/her own values without indoctri-
nation of another person's ethics and morals.
• Moral Action allows values to be developed
and internalized as a person moves beyond
thinking and feeling to action. It is based upon
a person's life experiences and relies on the
interaction of both internal and external forces
to combine as one ideal in the development of
a person's values. Moral action stresses placing
convictions into actions since thoughts and
feelings are not internalized until they have
been confirmed by experience.
Moral development, according to Kohlberg (1976)
proceeds through an invariant sequence of six
distinct stages of moral reasoning. These stages,
paraphrased, are:
Preconventional Level
Stage i Sticking to rules backed by punish-
ment of superior authority.
Stage 2 Following rules when in one's best
interest, avoiding punishment, bar-
gaining with authority.
 Professional Ethics
Conventional Level
Stage 3 Seeking approval of friends and family,
the need to be good in your own eyes.
Stage 4 Obedience to law and order, avoiding
the breakdown of society.
Postconventional Level
Stage 5 Awareness of other people's rights,
universal principles of justice.
Stage 6 Concern with consistent ethical prin-
ciples, equality of human rights and
respect for the dignity of human
beings as individuals.
Near the midpoint of this development (the conven-
tional level) a person makes moral judgments that
are considered to be good by one's family or society.
After passing this stage a person begins to exhibit
values that reflect a concern for law and order, Stage
4. Kohlberg believes that exposure to diverse experi-
ences are needed to break out of the law and order
mold thereby allowing the person to proceed to the
next levels of development.
Following this reasoning, White (1980) advocates
that college is one of the best places to encourage
this type of values development. She believes that
college experiences allow one to progress through
the stage of concern for individual rights and
proceed to the last of Kohlberg's stages, concern with
consistent, comprehensive ethical principles. This
stage represents an orientation toward a set of
autonomously selected universal principles as exem-
plified by the Golden Rule.
Historical perspective of professional ethics
in business
Not everyone agrees on the parameters of profes-
sional ethics, the current status of ethics in business,
or whether adults' ethical behavior can be modified
in the long-run. In this study we adopt Purcell's
(1985) definition. He states:
Ethics, applied to business, demands that every corpora-
tion, as a body of people united in enterprise, be
concerned with the righmess and wrongness of human
action. . . . Applied ethics - business ethics - can be
summed up basicallyas a concern for fairness.
453
Purcell's definition places emphasis on the people of
the organization, not the organization. Ethics, like
most behavioral topics, can be influenced by those in
power. Many studies have shown the influence of
corporate executives over those in their employ. If
they show a concern for fairness, it permeates the
entire organization. Managers can set the tone for
sound ethical behavior, but they cannot monitor
every business action as to its ethical consequences.
Varied pressures are placed on individuals to commit
unethical acts. However, survey findings as to the ex-
tent of such pressures are inconsistent. Touche Ross
(1988), an international public accounting firm, sur-
veyed more than one thousand people - corporate
executives, college deans, and members of Congress
- to get their opinions about business ethics in the
United States. They found that 97% of the respond-
ents believe businesses operate ethically and that 15%
of those same respondents believe that businesses are
"highly" ethical. Another survey of a cross-section of
individuals agreed with the Touche Ross study. The
consensus of these individuals was "that corporate
ethics are on a higher plane than ever before," (Mod-
ic, 1987),
Other studies of business ethics disagree with
these findings. Some of the surveyed respondents in
the two studies cited above, and others who claim
expertise in the study of ethics, believe that while
businesses as a whole are ethical, many individuals in
business do not operate in the same ethical sphere.
Many business critics are disappointed with the
present ethical climate of business (Peppers, 1988).
One study by an executive search firm confirms
these suspicions. This study found that 56% of the
respondents believe that people they know would
bend the rules to get ahead, and 51% of them stated
that they trust people less today than they did a few
years ago (Modic, 1987). It should also be noted from
this study that 25% of the respondents believe that
ethical behavior does not pay and in fact impedes
success. Although most reports indicate that people
believe that businesses are ethical, there is a sense
that ethical behavior at the personal level is far from
ideal.
Even CPAs (certified public accountants), one of
the professional groups that has a code of profes-
sional ethics, disagree as to the extent of professional
conduct within their ranks. A recent study by Finn et
al. (1988) of 332 randomly selected CPAs confirms
454 James R. Davis and Ralph E. Wehon,Jr.
this disagreement. Only 3% of the respondents
believe that anyone within their firm ever performs
unethically, yet on the whole they believe that 42%
of other CPAs "often engage" in unethical activities.
Several factors, both external and internal to the
corporate environment, set the stage for ethical
behavior. A conclusion of the Touche Ross (1988)
study was that society as a whole is to blame because
of the "decay in social and cultural institutions." And
according to one ethics consultant, the standards in
our society are constantly changing so there is doubt
as to who can say what is right and wrong. He
continues by saying that, "the result of such moral
relativism is that individuals are left to decide for
themselves what values and principles, what stand-
ards of good and bad, are applicable" (Goddard,
1988). This is unfortunate because situation ethics
have no place in either business or government
operations. A person needs to be able to separate
ethical from unethical situations without having to
create a set of standards for every situation.
Internally, the corprate environment can greatly
influence the ethics of the organization. While the
chief executive may set the tone by giving lipservice
to ethics and codes of conduct, without formal
policies and policing, they will not be effective.
Formal reviews and evaluations of ethical policies
are necessary for ethics to penetrate all areas of the
organization.
Even when there is a strong adherence to a code
of ethics, the pressures of middle management to
perform sometimes cause ethical breakdowns. To
meet sales quotas the actual sales figures are adjusted;
costs are incorrectly allocated to stay within the
budget; the possibilities are many and the means are
often creative. Often the managers assume that they
can do anything to achieve the desired results and if
not caught, or if caught and not reprimanded, their
behavior is reinforced.
Part of the dilemma with solving ethics problems
within the organization is that it is only one of the
influences, both society and government have roles
to play which are often detrimental to the well-
being of the corporate environment. Fortunately,
businesses have not let this deter their efforts to
improve ethical behavior. Within the organization,
the starting point has been devising a code of ethics.
Some experts believe that the process of creating and
implementing a code of ethics can have a greater
impact than the code itself. Employee involvement
has always been a great stimuli (Berenbeim, 1988).
Once ethical considerations become a part of
every employee's decision process the effectiveness
to the organization will greatly improve. The use of
codes of ethics continues to increase and in one
study, 80% of the respondents had a code of ethics in
their organizations (Berenbeim, 1988). As total em-
ployee involvement increases, and as people transfer
or move from one organization to another, the
spread of codes of ethics should continue. The
corporate attitude that ethical behavior is important
is reinforced when each employee is treated with
respect and the daily decisions reflect a proper
ethical attitude by managers at all levels (Genfan,
1987).
Ethical attitude development
Improving the ethical behavior of the organization
must coincide with improving the ethical behavior
of its employees. There is much disagreement as to
whether this is possible without the improvement of
the ethical behavior of society in general (Forisha
and Forisha, 1976). One way that society might be
improved is through education. This study examines
whether college education, specifically for business
students, changes, and hopefully improves, the
ethical attitudes, and perceptions of individuals.
While no one questions that education can in-
fluence human behavior regarding ethical matters,
many question whether the influence is material in
the long-run. This education process may be accom-
plished during college, through formal training
sponsored by the organization, or via on-the-job
training. Kohlberg (1973) believes that continued
exposure to diverse points of view is necessary
through one's mid-twenties and with this exposure a
person can resolve the confusion and relativism
characteristic of the postconventional stages. How-
ever, he states that there is no evidence that ethical
confusion is resolved in the direction of the highest
level of development. It may resolved back to the
stage of law and order.
That the majority of individuals never move
beyond the law and order stage is evident from the
values development literature's negative comments
on the effects of formal ethics training. According to
 Professional Ethics
Rohatyn (1987), "It must be embedded early, at
home, in grade school, in church. It is highly per-
sonal. I doubt it can be taught in college." Thurow
(1987), dean of MIT's School of Management, takes a
similar view. He believes that society, rather than
business, has the responsibility for teaching ethical
behavior. He states that most business school stu-
dents are beyond the age for ethics training. How-
ever, in his hst of sources for ethics training he
includes colleges and employers. According to
Thurow, to encourage ethical behavior business
schools and businesses must "place higher value on
goals other than personal or shareholder net worth."
He conditions this remark by saying that even this
action will not be effective until society itself
changes.
Lane et al. (1988) state, "... there is little empiri-
cal evidence to suggest that ethical behavior and
decision-making are enhanced through ethical edu-
cation." They support the hypothesis that short-run
awareness is possible through ethics education but
they do not believe that permanent changes in
ethical behavior are possible. This may indicate a
failure to resolve the confusion and relativism
associated with Kohlberg's postconventional stages,
and thus a return to law and order to define what is
moral or ethical. These conclusions appear to be the
consensus of most researchers in the area of formal
education and business ethics, and suggest that for
training to be effective it must be repetitive. There-
fore, codes of ethics are more likely to affect
employee behavior if they are part of an on-going
program that began during a person's college educa-
tion and continues during the career. From employ-
ment to termination, ethics should be periodically
included in each employee's training program.
Research rationale and hypotheses
Several research studies have been conducted with
business students and various aspects of professional
ethics. Research has been conducted to evaluate
changes in students' ethical behavior after one course
(Arlow and Ulrich, 1980), to determine if certain
business majors are more ethical (or honest) than
other majors (Kahalas et al., 1977) and (Cherrington
and Cherrington, 1979), and to determine the
impact of the exposure to a code of ethics on
455
students' attitudes (Fulmer and Cargile, 1979). How-
ever, from our review of the literature it is apparent
that more research is needed to further evaluate
where and how much, if any, ethical maturation (or
development) is taking place.
The number of business curricula requiring ethics
courses continues to grow, providing evidence that
disputes the claims of the values development
literature. Some educators evidently believe formal
ethics training does make a difference. An increasing
number of companies are putting ethics topics in
their training programs, and ethics consultants are
constantly in demand from service organizations
which need help in the area. While the literature is
replete with comments that ethics training for adults
is not effective except for short-term awareness,
ethics training continues to be implemented.
This study assists in filling the void of research
related to the benefits of ethics education. It ad-
dresses the notion that one's perception of ethical
behavior does change from the beginning of college
to the end of college. Our first primary hypothesis,
stated in its null form is:
Hol: For business majors, there is no difference
between lower division students', upper
division students' and graduate students'
perceptions of ethical behavior.
If rejected, this hypothesis will provide evidence that
there is a difference among the perceptions of ethical
behavior of students majoring in business. This
hypothesis does not address whether the changes
were caused by exposure to either ethics courses or
ethics segments within other courses, nor does it
address when the changes in perceptions of ethical
behavior take place. During the college years, a
person may be influenced by many new factors
previously outside his/her environment. This hy-
pothesis addresses the impact of the education
process as well as the overall college environment.
To support, or contradict, the first primary hy-
pothesis, two additional hypotheses were tested.
These hypotheses evaluate the ethical perceptions'
maturation process. The support hypotheses, SHo~
and SHob respectively, are: there is no difference
between lower division and upper division students'
perceptions of ethical behavior; and there is no
difference between upper division and graduate
students' perceptions of ethical behavior.
456 James R. Davis and Ralph E. Welton,Jr.
Our second primary hypothesis relates to the
specific ethics exposure received by college students.
Stated in its null form the hypothesis is:
Hog: There is no difference in the perceptions
of ethical behavior of students who have
had an ethics course or some formal
ethics training and those who have had
no formal exposure to ethics.
The surveyed students were grouped by formal
versus no formal exposure. If rejected, this will
provide an indication not found in early studies; i.e.,
ethical courses and exposure have an impact.
This hypothesis also has support hypotheses using
the same wording as the primary hypothesis except
that "students" is replaced with "lower division
students," "upper division students," and "graduate
students." These support hypotheses, SHoe, SHo d,
and SHoe respectively, help evaluate the maturation
process and the impact that ethics exposure has
within different class levels of students.
Our third primary hypothesis relates to the
gender of respondents. Stated in its null form the
hypothesis is:
Ho3: There is no difference in the perceptions
of ethical behavior of male and female
business students.
If rejected, this hypothesis will provide evidence that
there is a difference between male and female
business students in their perspectives on ethical
behavior. Support hypotheses, SHof, SHog, and SHoh,
evaluate the differences in perception by gender
within each class level of students.
Questionnaire development
To test the above hypotheses, a questionnaire was
developed that included statements designed to
probe respondents' perceptions of ethical behavior in
"gray" situations. Few real world situations fit neatly
into the do's and don't's of formal codes of ethics.
Several statements were designed to test the re-
spondents[ feel for impairment of objectivity. (This is
the point where a professional looses his/her objec-
tivity or subordinates judgment to another.) A total
of seventeen statements were tested (see Table I for a
complete listing). Because many statements present
"gray" situations, there may not be an absolute
"right" or "wrong" answer in each case. The test
hypotheses were developed primarily to evaluate
the similarities or dissimilarities of the respondents'
perceptions of ethical behavior and did not focus on
any particular aspect of values development.
The questions were developed from scenarios
familiar to business students and included a range of
activities from ethical financial reporting to loyalty
to a friend versus an employer. Some questions left
little room for assumptions while others let the
respondents use personal experiences to guide their
answers.
Overall, the questions were designed to evaluate
how much ethical reasoning changes from beginning
to end of the college experience. The questionnaire
attempted to stimulate the students into thinking
about ethical issues in business. The instrument was
intended to be a micro-measurement of the moral
development education model and to demonstrate
how business students (from lower division to upper
division to graduate student) are stimulated in their
development of increasingly sophisticated levels of
moral judgment.
Methodology
Three groups of students enrolled in various ac-
counting courses were surveyed, (1) freshman and
sophomore (lower division) business students, (2)
junior and senior (upper division) business students,
and (3) graduate students in business. The sample
consisted of 391 respondents: 131 lower division, 184
upper division and 76 graduate students. Within
these categories, 51 lower division, 123 upper
division and 33 graduate students had been exposed
to ethics. There were 208 males and 175 females
(eight respondents did not indicate sex).
Students were asked to. indicate whether they
agreed, were undecided, or disagreed with each
statement or question. An example of this is shown
in Table I for primary hypothesis one.
Because of the ordinal nature of the respondent
data, nonparametric statistics were employed to test
the statements of each hypothesis. A Kruskal-Wallis
one-way analysis of variance was performed on each
statement. The results of the Kruskal-Wallis test
were consistent with chi-square and the parametric
 ProfessionalEthics 457

TABLE I
Survey statements with percentage response by category

A D U Statements

Lower div. 20.0 55.4 24.6 (1) Questionable adjustments to financial

Upper div. 18.6 62.8 18.6 records that are used internally are
Graduate 10.5 79.0 10.5 acceptable.

Lower div. 50.0 23.1 26.9 (2) Questionable adjustments to financial

Upper div. 66.3 24.5 9.2 records that are used externally are
Graduate 72.3 23.7 4.0 unacceptable.

Lower div. 26.7 56.5 16.8 (3) Accepting a customer with questionable
Upper div. 9.2 76.1 14.7 credit, or a very short credit history
Graduate 14.5 76.3 9.2 is unethical.

Lower div. 38.2 41.2 20.6 (4) Accepting a customer with questionable
Upper div, 26.8 54.6 18.6 credit, or a very short credit history,
Graduate 30.3 48.7 21.0 who is a friend, is unethical.

Lower div. 3.0 71.0 26.0 (5) When business conflicts arise which
Upper div. 5.4 72.8 21.8 involve ethical issues, loyalty to a
Graduate 5.3 71.0 23.7 friend should outweigh loyalty to
company.
Lower div. 30.5 42.8 26.7 (6) Activities which improve a company's
Upper div, 34.4 40.5 25.1 short-term performance without
Graduate 34.2 46.1 19,7 hindering long-term performance are not
really ethical issues.
Lower div, 13.0 70.2 16.8 (7) Unclear policies on entertainment can
Upper div. 12.0 78.2 9.8 be used to justify purchasing personal
Graduate 9.2 85.5 5.3 items with company funds while on
business trips because the company is
inconveniencing your personal life and
a few extras are ok.
Lower div. 22.1 48.1 29.8 (8) Forcing quarterly sales figures to meet
Upper div. 15.8 65.2 19.0 a budget is acceptable if no difference
Graduate 13.2 77:6 9.2 is expected in annual sales.
Lower div. 23.6 46.6 29.8 (9) Forcing quarterly sales figures to meet
Upper div. 9.3 76.6 14.1 a budget (thus insuring a quarterly
Graduate 9.2 89.5 1.3 bonus) is acceptable if no difference
is expected in annual sales.
Lower div. 55.0 24.4 20.6 (10) It is unethical to allow personal
Upper div. 45.6 37.0 17.4 situations to influence business
Graduate 52.6 32.9 14.5 decisions.
Lower div. 11.4 69.5 19.1 (11) If corporate management sets policies
Upper div. 9.2 74.5 16.3 and your boss is part of corporate
Graduate 5.3 81.6 13.1 management, you should do what he/she
says even if it violates company
policies.
458 James R. Davis and Ralph E. Welton, Jr.

Table I (continued)

A D U Statements

Lower div. 10.7 84.0 5.3 (12) It is acceptable for companies to apply
Upper div. 7.6 87.5 4.9 policies differently for different
Graduate 5.3 84.2 10.5 employees in the same set of
circumstances.
Lower div. 9.1 61.1 29.8 (13) If you are a manager and your superior
Upper div. 12.6 56.3 3 I. 1 violates company policy but tells you
Graduate 14.4 68.0 27.6 his/her superior said it was ok, you
should follow orders and not go to top
management.
Lower div. 74.0 14.5 11.5 (14) Company policies/procedures should
Upper div. 60.7 21.8 17.5 always be followed unless they are
Graduate 57.9 25.0 17.1 illegal.
Lower div. 33.6 48.1 18.3 (15) A person reviewing/approving expense
Upper div. 27.5 62.6 9.9 reports has more responsibility for
Graduate 36.8 53.6 9.2 following company policy than someone
merely recording the transactions in
the accounting records.
Lower div. 13.0 33.6 53.4 (16) The importance of a division (one
Upper div. 6.0 73.1 20.9 making most of the profits) to a
Graduate 6.6 85.5 7.9 company allows taking liberties with
company policy within that division.
Lower div. 24.4 48.9 26.7 (17) The threat of being labeled
Upper div. 23.3 55.6 21.1 "whistleblower" in matters which may be
Graduate 17.3 73.4 9.3 wrong, but are immaterial in dollar
terms, allows a person to look the
other way.

A = Agree
D = Disagree
U = Undecided

analysis o f variance tests o f these statements which
were run as supporting tests. An alpha o f 0.10 was
used as the rejection threshold.
Test results
Hypothesis one
T h e first primary hypothesis, H o 1, stated that we
expected no difference among college students'
perceptions o f ethical behavior. In general, this
hypothesis was rejected. However, the null hypothe-
sis could not be rejected at an alpha o f 0.10 or less
for statements 5, 6, 10, 11, 12, and 13. Table II
summarizes the results o f the first hypothesis test.
Table II also includes the mean response o f each
group. A mean response o f greater than 3.5 indicates
agreement with the statement, less than 2.5 indicates
disagreement, while a response o f between 2.5 and
3.5 was considered to indicate that the respondents
were undecided. These mean responses are included
 Professional Ethics 459

TABLE II
Results of hypotheses testing

Statement Mean responses of hypothesis one only Significance(alpha)

Lower Upper Graduate Hypothesis Hypothesis Hypothesis
div. div. level one tWO three

1. 2.29 2.11 1.63 0.0055 0.4079 0.7285

2. 3.54 3.84 3.97 0.0035 0.5078 0.1460
3. 2.40 1.66 1.76 0.0001 0.0007 0.7538
4. 2.94 2.44 2.63 0.0468 0.4986 0.4971
5. 1.64 1.65 1.68 0.9580 0.2411 0.2996
6. 2.76 2.88 2.76 0.7838 0.4328 0.8974
7. 1.85 1.67 1.47 0.0573 0.1166 0.0095
8. 2.48 2.01 1.71 0.0003 0.0182 0.0501
9. 2.54 1.65 1.39 0.0001 0.0070 0.0203
10. 3.61 3.17 3.39 0.1114 0.1656 0.5027
11. 1.84 1.70 1.47 0.1420 0.0135 0.0596
12. 1.53 1.40 1.42 0.6363 0.9230 0.0837
13. 1.96 2.13 2.13 0.6032 0.2689 0.8040
14. 4.19 3.78 3.66 0.0219 0.1912 0.7675
15. 2.71 2.30 2.66 0.0760 0.1746 0.0018
16. 2.59 1.66 1.42 0.0001 0.0547 0.9741
17. 2.51 2.36 1.88 0.0117 0.0005 0.7107

in Table II only as a summarization of the response Hypothesis two

data. Actual hypotheses tests were preformed on
comparisons of distributions not means. In order for
the null hypothesis to be rejected, the groups had to
differ in both their responses and their degree of
agreement, disagreement, and undecidedness.
Since the results of this hypothesis testing sup-
ports the alternative hypothesis that the perceptions
of ethical behavior are different, it was a logical
extension to test the groups against each other to
see if students at various levels of education exhibited
differences or similarities in ethic perceptions. Sup-
port hypotheses SHoa and SHob tested each level
against the next progressive level of education.
Support Hypothesis a had nine of seventeen (2, 3, 4,
8, 9, 10, 14, 15, and 16) individual statements that
could be rejected while Support Hypothesis b had
only five (1, 8, 9, 16, and 17) individual statement
rejections (see Table III). These results indicate that
there is a difference between the ethical percepfons
of lower versus upper division business students but
that there is less difference between upper division
and graduate business students.
The second primary hypothesis, Ho2, stated that we
expected no difference in the perceptions of ethical
behavior of students who have had an ethics course
or some formal ethics training and those who have
had no formal exposure to ethics. The students were
grouped by formal versus no formal exposure. This
hypothesis could not be rejected. Only six of the
individual statements (3, 8, 9, 11, 16 and 17) could be
rejected at an alpha of 0.10 or less. Thus it would
appear that formal ethics training was not a signifi-
cant factor in the students' perceptions of ethical
behavior. The Kruskal-Wallis test results are pre-
sented in Table II.
None of the support hypotheses for this primary
hypothesis could be rejected although SHoa came
close with seven rejected statements as reported in
Table III. Tests of the support hypotheses SHoe and
SHoe resulted in the rejection of three statements (6,
13, 17), and zero statements, respectively. Thus,
within class levels formal ethics training did not
statistically differentiate students' perceptions of
460 James R. Davis and Ralph E. Welton,Jr.

TABLE III
Results of support hypotheses testing

Significance (alpha)
Statement SHo~ SH% SH% SHod SH% SHoe SHog SHoh

1. 0.2570 0.0136 0.6945 0.3908 0.1115 0.6733 0.6128 0.0884

2. 0.0416 0.4533 0.5418 0.4274 0.3467 0.9466 0.0660 0.2990
3. 0.0001 0.8590 0.1748 0.0529 0.2360 0.0290 0.2068 0.3046
4. 0.0136 0.4065 0.7628 0.5090 0.2503 0.0526 0.2491 0.1122
5. 0.8336 0.7914 0.3128 0.8507 0.1860 0.3372 0.9845 0.3228
6. 0.5361 0.6051 0.0478 0.7932 0.9910 0.7637 0.6568 0.1329
7. 0.1459 0.2000 0.9922 0.5017 0.2506 0.1666 0.1212 0.2153
8. 0.0045 0.0775 0.3845 0.1903 0.2012 0.7888 0.1393 0.5560
9. 0.0001 0.0326 0.6838 0.0522 0.6863 0.3883 0.2911 0.2466
10. 0.0364 0.3611 0.9269 0.0651 0.3384 0.2805 0.9717 0.2821
11. 0.3255 0.2000 0.6081 0.0012 0.8976 0.3265 0.4253 0.1453
12. 0.3595 0.5570 0.2056 0.0760 0.2751 0.8732 0.2507 0.1135
13. 0.3293 0.9346 0.0456 0.3683 0.3935 0.5996 0.5309 0.6281
14. 0.0158 0.6239 0.3596 0.0907 0.6070 0.2666 0.4551 0.9906
15. 0.0293 0.1532 0.3553 0.4914 0.5443 0.1448 0.1386 0.0250
16. 0.0001 0.0472 0.3525 0.9967 0.9045 0.5990 0.0965 0.5612
17. 0.3518 0.0187 0.0049 0.0017 0.90•3 0.6702 0.9197 0.6801

ethical behavior. And similar to the results of the
hypothesis one tests, it is only at the upper division
level, where ethics exposure is strongest, that those
who have had such exposure evidently change their
perspective to some degree.
Hypothesis three
The third primary hypothesis, Ho3, stated that we
expected no difference in the perceptions of ethical
behavior of males and females. This hypothesis, and
its supporting hypotheses SH% SHog, and SH%,
could not be rejected. With regard to the primary
hypothesis, individual statements 7, 8, 9, 11, 12 and
15 were rejected at an alpha level of 0.10 or less.
Tests of the support hypotheses resulted in the
rejection of two statements each, statements 3 and 4
for SHo e, 2 and 16 for SHog, and 1 and 15 for SH%.
Thus, gender was not a critical factor in differentiat-
ing the ethical perceptions of business students.
Research conclusions
Analysis of the three primary hypotheses suggest that
no single aspect of a person's college environment
influences his/her perspectives on ethical behavior.
Null Hypothesis One was the only hypothesis that
provided any strong evidence for rejection. With its
rejection, there is evidence that the perceptions of
ethical behavior of the three groups of students is
different. When considered with its two support
hypotheses, SHo~ and SHo b, the results indicate a
maturation process because there is evidence that
freshmen and sophomores are different from juniors
and seniors although juniors and seniors are not
much different from graduate students. These test
results imply a tendency over time (progression from
beginning business student to graduate student) for
students to change their attitudes about ethical
behavior. However, it is difficult to determine
whether the changes were caused by value transmis-
sion, value clarifications, moral development, or
moral action. During the education cycle at our
university the students are exposed to all four
approaches with value transmission the least evident.
Hypothesis Two test results indicate that formal
ethics training is not likely to be a dominant factor
in the development of one's perceptions of ethical
behavior. On this point, our tests results agree with
 ProfessionalEthics 461

the Lane et al. (1988) assertion that " . . . there is little
empirical evidence to suggest that ethical behavior
and decision-making are enhanced through ethical
education." Our study seems to indicate that the
enhancement comes from a general exposure to the
college environment with ethics exposure only one
aspect of that environment. While ethics education
alone is not shown to be a significant factor in the
maturation process, on the basis of this study it
cannot be ruled ineffective.
If a person's perceptions about professional ethics
are enhanced by association with one's peers and
colleagues, the fact that many persons have had
ethics training may serve to raise the awareness of
the group as a whole (the moral action concept). In
other words, it is possible that those who have not
had formal ethics training may emulate and adopt as
the norm the ethical behavior of those who have
participated in formal ethics training.
While there may be some in our society who
think that either men or women are more ethical in
their behavior than the other, our test results indi-
cate that there is little difference between the
perceptions of ethical behavior based on gender,
Mthough Ho3 resulted in six statement rejections,
the support hypotheses had only two rejections each.
Therefore, by education level, male and female
business students are very similar in their percep-
tions of ethical behavior.
Having dismissed the notions that formal ethics
training and gender make a difference in the ethical
perceptions of individuals, the study began to focus
on the question of whether students' ethics percep-
tions improve or deteriorate during their college
years as ethics exposure increases. Using Hol, the
extended analysis centered on those statements or
questions from the questionnaire that were rejected,
i.e., there is evidence to support the alternative
hypothesis that the groups are different. This evalua-
tion was performed by analyzing the response means
for each statement.
As reported in Table II, the statements rejected
under Ho 1 were numbers 1, 2, 3, 4, 7, 8, 9, 14, 15, 16,
and 17. Each statement was evaluated for the mean
response being either agree, disagree, or undecided.
Table IV includes the suggested ethical response of a
group of sixty-nine randomly selected accounting
professionals. Accountants were chosen because the
statements on the questionnaire were accounting
oriented.
Each statement was evaluated as to the direction
of movement from lower division through upper
division to graduate student. The direction of move-
ment was compared to the professionals' opinions as
to the most ethical response, thereby providing a
limited analysis of Values Transmission. These
comparisons are found in Table IV. Mso, the degree
of dispersion about the mean was compared to the
lower division group to evaluate the changes in
consensus. For similar responses the direction was

TABLE IV
Analysis of statements rejected under hypothesis one

Statement Lower division Suggested Direction of movement from lower level

response response responses dispersion

1 Disagree Disagree Toward stronger disagree Less

2 Agree Agree Toward stronger agree More
3 Disagree Disagree Toward stronger disagree Mixed
4 Undecided Undecided Mixed Same
7 Disagree Disagree Toward stronger disagree Less
8 Disagree Disagree Toward stronger disagree Less
9 Undecided Disagree Toward disagree Less
14 Agree gree Toward Undecided More
15 Undecided Undecided Mixed Mixed
16 Undecided Disagree Toward disagree Less
17 Undecided Disagree Toward disagree Mixed
462 James R. Davis and Ralph E. Welton,Jr.
given as "toward stronger agree/disagree" as appro-
priate if the numerical mean responses moved closer
to the responses of the accounting professionals.
"Mixed" directions meant that the upper level and
graduate student responses did not move in the same
direction. A response direction of "none" indicated
that the responses were almost identical. The one
response direction of "toward undecided" was for
queston 14. This statement was designed to see if the
respondents placed any emphasis on the difference
between illegal and unethical activities. Personal
interviews with several respondents who had com-
pleted the survey indicated that many made the
assumption, howbeit incorrectly, that unethical and
illegal mean about the same thing; most did not
consider anything legal to be unethical. This indi-
cates that these students were responding from a
Stage 4 (law and order) orientation.
Of the eleven statements that were rejected, five
had less dispersion as responses moved from lower to
upper to graduate level, two had more dispersion,
three were mixed and one was the same. Excepting
statements 4, 14 and 15, the direction of movement,
with lower division student responses as the base,
was very consistent. Of these, only statement 14
response movement could be judged questionable as
mentioned above. The direction of response move-
ment of the eight remaining statements strongly
support each other in their implications of increased
similarities of ethical behavior of advancing levels of
college students.
Not to be ignored are the six statements under
Hypothesis One that were not rejected. Table V
provides the same analysis of these statements as did
Table IV about the rejected statements. As would
TABLE V
Analysis of statements not rejected under hypothesis one
Statement Lower division Suggested
response response
5 Disagree Disagree
6 Undedded Undecided
10 Agree Agree
11 Disagree Disagree
12 Disagree Disagree
13 Disagree Disagree
be anticipated with nonrejected statements, the
respondents tended to agree in their responses and
the mean responses also agreed with the anticipated
responses of the professionals. Assuming the re-
sponses of the accounting professionals indicate
proper ethical behavior, these six statement re-
sponses indicate that some values transmission has
already taken place.
As an overall analysis, with ten statements show-
ing movement toward perceptions of more ethical
behavioral and seven showing little or no movement,
our conclusion is that the college environment does,
in fact, influence the ethical behavior of students.
Even if this research evidence is not overwhelming
in its conclusions, at least the trend of the students'
thinking is positive.
Although specific exposure to ethics courses and
training could not be substantiated as influencing
students' thinking, such exposure can surely do no
harm. In addition, if all business faculty provide
students with frequent examples of ethical behavior,
the overall exposure can only help increase their
awareness of the area. By increasing the awareness of
ethics in every area of business, the students should
become conscious of the importance of professional
ethics in business and hopefully this will transcend
into their professional careers.
Summary and recommendations
The results of our hypothesis testing show a matura-
tion process regarding the perceptions of ethics of
college students majoring in some area of business.
Neither formal ethics training nor gender were
Direction of movement from lower level
response dispersion
None More
None More
Mixed More
Toward stronger disagree Less
Toward stronger disagree Less
None More
 Professional Ethics
shown to be significant factors in evaluating a
person's ethical perceptions. Our study indicates that
the enhancement of ethical behavior comes from
multiple exposures to the business environment via
college and not from any single element.
More research needs to be undertaken to study a
specific group of students through a longitudinal
study, possibly beginning with a group of freshmen
and tracking them as they progress through their
college years. Examinations should be made about
the type of education process that is the most effec-
tive for business students. The four values develop-
ment approaches should be studied separately and in
hybrid form. Research could be conducted as to how
the students developed their ethical perceptions -
personal experiences, textbook inferences, classroom
discussions, role playing, etc.
With emphasis being placed on ethics develop-
ment by both business and government, it is impera-
tive that business schools attempt to increase the
awareness of their students in this area. This topic
cannot be left only to philosophy departments to
educate the college populous, business students need
to receive more exposure to values development
throughout the business curricula with typical
situations drawn from the business environment.
Such exposure should attempt to draw the students
beyond Kohlberg's law and order stage. This effort
should include Values Transmission where appro-
priate. Professional codes of ethics generally re-
cognize that a professional is called to an ethical
standard which is higher than his/her legal responsi-
bilities.
References
Arlow, P. and T. A. Ulrich: 1983, 'Can Ethics be Taught to
Business Students?', The CollegiateForum (Spring),p. 17.
Berenbeim, R. E.: 1988, 'An Outbreak of Ethics', Across the
Board (May),pp. 14-19.
Cherrington, J. o., and D. J. Cherrington: 1979, 'Honesty
aM Business Ethics in the Accounting Profession',
Collected Papers of the Annual American Accounting
AssociationMeeting (August),pp. 645-658.
Cohen, J. tk and W. Pant: 1989, 'Accounting Educators'
Perceptions of Ethics in the Curriculum', Issues in
Accounting Education (Spring),pp. 70--77.
Finn, D. W., L. B. Chonko, and S. D. Hunt: 1988, 'Ethical
463
Problems in Public Accounting:The View from the Top',
Journal ofBusinessEthics (July),pp. 605-615.
Forisha, B. E. and B. E. Forisha: 1976, Moral Development and
Education (Professional Educators Publications, Inc.,
Lincoln, Nebraska).
Fulmer, W. E., and B. R. Cargile: 1987, 'Ethical Perceptions
of Accounting Students: Does Exposure to a Code of
Professional Ethics Help?', Issues in Accounting Education
(Fall), pp. 207--219.
Genfan, H.: 1987, 'Formalizing Business Ethics', Training and
DevelopmentJournal (November),pp. 35-37.
Goddard, R. W.: 1988, 'Are You an Ethical Manager?',
PersonnelJournal (March),pp. 38-47.
Kahalas, H., D. L. Groves,and T. W. Bonham: 1977, 'Impor-
tance of Honesty as a Value Factor for Business Students',
CollegeStudentJournal, pp. 112-117.
Kohlberg, L.: 1973, 'Collected Papers on Moral Develop-
ment and Moral Education', (Laboratoryof Human De-
velopment, Harvard University).
Kohlberg, L.: 1976, 'Moral Stages and Moralization: The
Cognitive-Developmental Approach', in Moral Develop-
ment and Behavior: Theory, Research, and Social Issues, ed. by
Thomas Lickona (Holt, Rinehart and Winston, New
York), pp. 34-35.
Kohlberg, L. and R. Mayer. 1972, 'Development as the Aim
of Education', HarvardEducationalReview, vol 42 no 4, pp.
449-496.
Lane, M. S., D. Schaupp, and B. Parsons: 1988, 'Pygmalion
Effect: An Issue for Business Education and Ethics',
Journal ofBusiness Ethics 7, pp. 223--229.
Modic, S.J.: 1987, 'Corporate Ethics: From Commandments
to Commitment', lndustry Week (December),pp. 33-36.
Peppers, D.: 1988, 'Make Money. Have Fun. Be Ethical', New
York Times (July24), sec. 3, p. 3.
Purcell, T.: 1985, 'Institutionalizing Business Ethics: A Case
History', Businessand ProfessionalEthicsJournal 4, no. 2, pp.
39--51.
Rohatyn, F. G.: 1987, 'Ethics in America's Money Culture',
New York Times (June 3), p. A27.
Superka, D.: 1976, Values Education Sourcebook, (Social
SciencesConsortium, Bolder, Colorado).
Thurow, Lester C.: 1987, 'Ethics Doesn't Start in Business
Schools', New York Times, 0une 14),p. E25.
Touche Ross & Co.: 1988, Ethics in American Business: A
SpecialReport, (Touche Ross & Co., New York).
White, Kathleen M.: 1980, 'Problems and Characteristics of
College Students', Adolescence, (Spring),pp. 23-41.
College of Commerce and Industry,
School of Accountancy, Clemson University,
Clemson, SC 29634-1303,
U.S.A.