Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 16

Changed Conditions and Ethical Behavior A recent research study investigated whether or not the ethical judgment of an accountant would be affected by the pattern of unethical behavior-gradual, or at a single point in time. Specifically, the following two versions of a case were presented to decision makers, both of which involved a potential misstatement of the company's financial statements: (a) A company has no unethical behavior for the first two of three years (the financial statements are fairly presented), but in the third year the financial statements are misstated, and (b) the company pushes the unethical envelope gradually over the three-year period, so that the misstatement is there but is spread over three years.
Required Accountants participating in the study were asked to choose in which case, (a) or (b), they would approve the financial statements of the company. Which case do you think most participating accountants chose, and why