Seniority Ethical Attitudes LITERATURE REVIEW

c. For the researcher, in order to better understand and expand knowledge regarding seniority and ethical attitudes.

CHAPTER II LITERATURE REVIEW

A. Seniority

The definition of seniority is relative position or rank on a scale. Early analysis by Conroy et al 2009, p. 1, Employee rank in accounting firms – like that of most professional firms – is based largely on seniority. An entry-level auditor can expect to begin at the ‘‘staff’’ level before being promoted to the ‘‘senior,’’ ‘‘supervisor,’’ ‘‘manager’’ or ‘‘partner’’ level in the firm. Rank is therefore likely to be positively correlated with experience and knowledge. So, the indicators of employee rank are based on seniority, experience and knowledge. So, the employee level can be measure from junior until senior employee. However, many published investigations in the business ethics literature suggest that there does not appear to be a similar, positive relationship between level and ethical attitudes, at least using moral reasoning ability as a proxy for ethical attitudes. In fact, many empirical investigations in this area have found that moral reasoning ability among accountants seems to be inversely related to their level in the firm, for example managers and partners demonstrate lower levels of moral reasoning ability than their junior counterparts Conroy et al, 2009, p. 183. 9

B. Ethical Attitudes

The definition of ethic comes from the Greek “ethos”, meaning character. Another word for ethics is morality, which comes from the Latin “mores”, which means the habit. Morality centered on the right and wrong in human behavior. Therefore, the ethics related to the question of how people will behave toward one another Boyton,et al., 2002 cited in Rosita 2008, p.7. Code of ethics according to Indonesian dictionary is the norm and principles accepted by certain groups as a basis for behavior Depdiknas, 2003 cited in Rosita 2008, p.7. The business ethic literature has consistently demonstrated that gender, age, and, to a lesser degree, race play key roles in predicting an individuals’ ethical attitudes Emerson, et al., 2006, p. 75. Age is also a key indicator of ethical attitudes. Conroy, et al 2009, p. 183 use the ethical attitudes use moral reasoning ability as a proxy. Burton and Goldsby 2009, p. 145 stated that one such concept that affects practice in business ethics is the phrase ‘‘good ethics is good business’. Presumably, the idea is that firms whose behavior at least meets an identifiable and justifiable moral standard, or that exhibit good ethics, benefit the shareholders in the long run say, a five-year or ten-year period by making above-average returns good business. 10 Ethical attitudes can affect the financial result of the company. Burton and Goldsby 2009, p. 145 stated that ethical or unethical behavior leads to positive or negative financial results.

C. The Indonesian Institute of Accountants IAI Code of Ethics