The interrelationship between ethical accounting and behavioral finance: Challenges for auditors

Abstract

This research addresses the complex relationship between ethical accounting and behavioral finance, focusing on auditors' challenges in the financial context. Ethical accounting is important in promoting transparency and trust within companies, enhancing their reputation, and contributing to sound financial decisions. Meanwhile, behavioral finance refers to how psychological and social factors influence financial decision-making, which can lead to deviations from rational behaviors governing financial operations.

To achieve the research objectives, the quantitative method was adopted by distributing questionnaires to a sample of 120 auditors in audit firms and offices, and 98 questionnaires were retrieved for analysis, reflecting a good and reliable response from the sample. The questionnaire included 30 questions designed to assess ethical practices, psychological and financial pressures, and the extent of their impact on auditors' financial decision-making, through the use of a set of statistical analyses, most importantly descriptive statistics, regression analysis to study the relationships between variables, and correlation analysis to study the relationship between financial pressure and ethical commitment.

The results showed a significant relationship between financial ethics and investment behaviors, as auditors experiencing financial stress indicated a lower level of commitment to ethics, negative effects were found between psychological stress and ethical decisions, and a positive relationship between commitment to ethics and the effectiveness of financial decisions, reflecting the importance of ethics in improving auditors' performance.

Based on the findings, the researcher recommends that ethical training for auditors should be strengthened. This requires the design of training programs aimed at developing ethical skills and behavioral standards, communication between auditors and management should be improved to ensure appropriate support in the face of ethical and financial pressures, and companies should develop strategies that support ethical commitment and enhance auditors' ability to make responsible financial decisions.