Studying the Effect of Financial Managers' Personality Integrity on the Relationship Between Perceived Role Conflict and Opportunistic Financial Reporting Behavior from an Ethical Perspective

Subject Areas : Ethics and accounting

Samaneh Ghadimi ¹ , Saeid AliahAmdi ² , Mohsen Dastgir ³

1 - PhD student, Department of Accounting, Isfahan Branch (Khorasgan), Islamic Azad University, Isfahan, Iran
2 - Associate Professor, Department of Accounting, Isfahan Branch (Khorasgan), Islamic Azad University, Isfahan, Iran
3 - Professor, Department of Accounting, Isfahan Branch (Khorasgan), Islamic Azad University, Isfahan, Iran.

Received: 2024-05-10 Accepted : 2024-08-31 Published : 2024-09-26

Keywords: Personality integrity, Role conflict, Opportunistic financial reporting, Professional ethics, Financial management.,

Abstract :

 

 

1. Introduction
   High-quality financial reporting is vital for stakeholders to make informed decisions based on accurate representations of a firm’s financial condition. However, the increasing prevalence of opportunistic financial reporting—practices aimed at manipulating earnings or misrepresenting financial outcomes—poses significant ethical and professional concerns. This study explores the influence of perceived role conflict among financial managers on such opportunistic behaviors and assesses whether personality integrity can moderate this relationship from an ethical standpoint.
2. Theoretical Background and Literature Review

Perceived role conflict arises when conflicting expectations are placed on an individual in the workplace, particularly when organizational demands contradict personal or professional values. Financial managers often experience such conflict when pressured by senior executives to manipulate reports in ways that prioritize shareholder interests over financial transparency.
The literature supports the notion that role conflict can erode ethical sensitivity, thereby fostering unethical decision-making and misreporting (e.g., Hegers, 2021; Desai et al., 2020).

Personality integrity refers to the internal harmony of values, goals, and behaviors. Individuals with high integrity are generally better at aligning their actions with ethical standards and are less likely to succumb to unethical pressures. However, few empirical studies have explored how this personality trait interacts with organizational stressors like role conflict to influence ethical decision-making in financial reporting.

This study aims to fill this gap by examining:

1. Whether perceived role conflict increases the likelihood of opportunistic financial reporting;
2. Whether personality integrity affects the likelihood of such behavior;
3. Whether personality integrity moderates the effect of role conflict on opportunistic reporting from an ethical standpoint.

3. Research Design and Methodology:

The study adopts a survey-based and quasi-experimental design with a practical orientation. The data was collected from 166 financial managers in Iran in 2023, each with a minimum of five years of managerial experience. A scenario-based questionnaire was used, adapted from Hegers (2021) and Desai et al. (2020), incorporating elements to assess role conflict, personality integrity, and ethical perceptions of earnings management.

• Opportunistic financial reporting was measured through five scenarios reflecting aggressive earnings management strategies (e.g., expense deferral, revenue shifting), using a 5-point Likert scale on ethical appropriateness.
• Role conflict was measured using a 15-item instrument from Rizzo et al. (1970), distinguishing between high and low conflict based on sample averages.
• Personality integrity was assessed through a 4-item scale based on Sheldon & Kasser (1995), capturing congruence between life goals and daily actions.

Analytical Tools:

A two-way ANOVA was used to test the study’s hypotheses. The analysis considered:

• Main effects of role conflict and personality integrity on opportunistic reporting;
• Interaction effects between the two variables;
• Covariate controls for demographic factors (age, gender, experience, education).

Key Findings:

1. Role Conflict Increases Opportunistic Reporting:
   Results revealed a significant positive relationship between perceived role conflict and managers’ willingness to engage in unethical reporting. Managers experiencing higher conflict were more likely to justify aggressive earnings management, aligning with prior research (e.g., Hegers, 2021).
2. Personality Integrity Alone Has No Direct Effect:
   Contrary to expectations, personality integrity did not independently reduce the likelihood of opportunistic reporting. This finding diverges from earlier theoretical models suggesting a direct protective effect of personality integrity (e.g., Dikolli et al., 2020).
3. Interaction Effect is Significant:
   A significant interaction was found between personality integrity and role conflict. Specifically, financial managers with high personality integrity and low role conflict showed reduced willingness to engage in opportunistic reporting. However, when role conflict was high, even those with strong integrity were vulnerable to ethical compromises.

Interpretation and Discussion:
These findings suggest that ethical behavior in financial reporting is not merely a function of personal integrity. Instead, contextual pressures, such as conflicting organizational roles, play a critical role in ethical decision-making. High personality integrity may not fully shield managers from unethical behavior unless organizational environments are structured to minimize conflicting expectations.

This aligns with theories in moral psychology and behavioral ethics, which emphasize the importance of moral disengagement and situational triggers. Managers under stress may rationalize unethical actions, especially when the pressure is rooted in role ambiguity or misaligned incentives from superiors.

Practical Implications:

1. For Companies:
2. Firms should invest in conflict management systems and ethical training to reduce role ambiguity. Ensuring clear job descriptions, open communication, and psychological support for financial managers may mitigate unethical reporting practices.
3. For HR and Governance:
4. Organizations should assess personality traits such as integrity during hiring and promotion processes for financial leadership roles. However, they must also recognize that such traits are not a silver bullet; environmental and structural factors must also be addressed.
5. For Auditors and Regulators:
6. The study underscores the importance of monitoring not only financial results but also managerial pressures and conflicts that may lead to financial misreporting. External oversight bodies should pay attention to signs of role strain and behavioral indicators of compromised integrity.

Limitations:

• Reliance on self-reported data and scenario-based judgments limits external validity.
• The study’s cultural context (Iran) may influence the generalizability of the findings to other environments.
• The binary classification of role conflict and personality integrity may oversimplify complex psychological phenomena.

Recommendations for Future Research:

• Investigate other personality traits (e.g., narcissism, locus of control, emotional intelligence) as moderators.
• Explore longitudinal designs to track changes in ethical decision-making over time.
• Conduct cross-cultural comparisons to examine how institutional factors influence the integrity–conflict–reporting nexus.

4. Conclusion:
   This study contributes to the accounting ethics literature by highlighting how organizational stressors, particularly role conflict, can undermine ethical financial reporting practices. While personality integrity can buffer these effects, its impact is contingent on the organizational context. A combined approach that integrates individual-level assessments with structural conflict management appears most promising for mitigating opportunistic financial behavior among financial managers.

 

 

 

 

 

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