Attitudes of Students and Accounting Practitioners Concerning the Ethical Acceptability of Earnings Management Marilyn Fischer Kenneth Rosenzweig ABSTRACTs. There are man}, ways that accountants and managers can influence the reported accounting results of their organizational units. When such influ- ence is directed at changing the amount of reported earnings, it is known as earnings management. The purpose of this paper is to present the results of surveys of undergraduate students, MBA students, and practicing accountants concerning their attitudes on the ethical acceptability of earnings management. Analysis of the survey results reveals how the attitudes of the three groups differ and what variables are asso- ciated with these differences. Based on the analysis, the authors suggest changes in accounting education curriculum and ethics awareness programs in business which might: increase students' and practitioners' sensitivity to the ethical ramifications of earnings management. Leading associations in accounting have called for increased emphasis on ethics education in accounting curricula. For example, the Report of the National Commission on Fraudulent Financial Reporting (commonly known as the Treadway Commission Report) made this recommenda- tion: "The business and accounting curricula should emphasize ethical values by integrating their development with the acquisition of knowl- Marityn Fischer, is Assistant Professor of Philosophy at the University oarDayton in Dayton, Ohio. She spe- cializes in workplace ethics, particularly in the nonprofit sector, and has published articles in business ethics, and social and political philosophy. _Kenneth Rosenzweig, is Associate Professor of Accounting at the University of Dayton in Dayton, Ohio. He spe- cializes in a!eaching management accounting, and has published articles in a wide variety of accounting areas. edge and skills to help prevent, detect, and deter fraudulent financial reporting" (page 82). The American Accounting Association has called for increased efforts in accounting education to foster students' sensitivity to ethical and social responsibilities (American Accounting Asso- ciation Committee on the Future Structure, Content, and Scope of Accounting Education, 1986). Donnelly and Miller (1989) found empir- ical support among accounting professors for changing accounting curricula to include greater discussion of ethics as recommended by the Treadway Commission. 1 In order to address these concerns, specific topics in ethics and accounting need to be: iden- tified for curricular development. Earnings man- agement is one such topic because of ethical ambiguities associated with the practice. The purpose of this paper is to present information collected from undergraduate students, MBA students, and practicing accountants concerning their attitudes on the ethical acceptability of various earnings management actions. Analysis of this information will reveal which types of earnings management activities respondents consider to be ethically objectionable and which groups of respondents find the various earnings management activities to be most objectionable. Knowing current attitudes toward earnings management will be helpful for educators inter- ested in integrating ethical concerns into accounting programs. It will also be useful to businesses and professional associations as they develop their own policies, standards and educational programs regarding earnings management. Journal of Business Ethics 14: 433-444, 1995. © 1995 KIuwer Academic Publishers. Printed in the Netherlands.