The conceptual framework of this thesis

As noted previously, the TPB is the theoretical base for this thesis. In this model, variables of behaviour are treated as dependent variables. However, observing

behaviour is a difficult task, as such prior studies frequently utilise intention as a

reliable substitute for behaviour (Carpenter & Reimers, 2005), since the great majority of follow-up and longitudinal studies of human behaviour show that behaviour and intention are significantly correlated (e.g., Leonard et al., 2004; Guo, Ziao & Tang, 2009; De Cannière, De Pelsmacker, & Geuens, 2009). Intention is described as the subjective possibility that an individual performs a certain behaviour (Fishbein & Ajzen, 1975). In this context, Ajzen’s (1985) research has convincingly demonstrated that intention is a valid surrogate for behaviour. Attitudes towards behaviour,

subjective norms and perceived behavioural control are independent variables

explaining an auditor’s ethical intention. Moreover, the KP micro-level model, discussed in Chapter 3, also identifies variables related to an auditor’s ethical decision- making process when they face pressure from their clients. These variables include

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corporate ethical values. Hence, these variables are employed to decompose the

independent variables within the TPB model to further investigate an auditor’s ethical intention within auditor-client relationships. The complete model is provided in Figure 4.

Figure 4: Hypotheses within the conceptual framework

4.1.1 TPB variables

The TPB is an extension of the Theory of Reasoned Action (TRA) (Ajzen & Fishbein, 1980; Fishbein & Ajzen, 1975). In the TPB conceptual framework, an individual’s intention is influenced by three antecedents: attitudes towards behaviour, subjective

norms and perceived behavioural control. Attitudes towards behaviour refers to the

individual’s assessment of the behaviour, and subjective norms refers to the perceived influence of “others” on the individual’s behavioural intention. The factor of perceived

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control, is referred as an individuals’ evaluation of how easy or difficult it is for them to perform a behaviour (Ajzen, 1991). These three factors are presented in Table 13.

Table 13: The TPB variables Dependent variables Independent variables

Intention

Attitudes towards behaviour Subjective norms

Perceived behavioural control

4.1.2 The KP micro-level model variables

Other antecedents are drawn from the KP micro-level model. In this model, a series of internal and external variables affecting an auditor’s ethical intention within auditor- client relationships have been proposed. After examining these variables in Chapter 3 through reviewing relevant literature (e.g., Hunt & Vitell, 1986; Victor & Cullen, 1988; Forsyth, 1980; 1992; Elango et al., 2010), the antecedents of ethical ideologies,

codes of ethics, organisational ethical context (including ethical climate and corporate ethical value) and interpersonal relationships are adopted in this thesis.

4.1.2.1 Variables associated with attitudes towards behaviour

As shown in the Figure 4, the variables which decompose the attitudes towards

behaviour include ethical ideologies (idealism and relativism), and independence in mind. These variables are presented in Table 14.

Table 14: The variables decomposing attitudes towards behaviour Dependent variables Independent variables

Attitudes towards behaviour Ethical ideologies:

Idealism Relativism

Code of ethics: Independence in mind

Ethical ideologies are used to explain differences of moral judgements among

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respect to two factors: idealism and relativism. Idealism refers to the extent that an individual is directed by deontic principles and beliefs. Meanwhile, relativism represents the extent to which people deny universal ethical principles and focus on situational factors for decision-making purposes.

Code of ethics offers guidance to auditors on how to perform ethically in the auditing

process (Warming-Rasmussen & Windsor, 2003). This variable also includes two basic constructs: independence in mind and independence in appearance.

Independence in mind is defined as “the state of mind that permits the expression of a

conclusion without being affected by influences that compromise professional judgement” (China code of ethics, 2011; p. 34). As shown in Figure 4, this thesis posits that this variable is linked with attitudes towards behaviour.

4.1.2.1 Variables associated with subjective norms

As shown in the Figure 4, the variables which are used to decompose subjective norms includes independence in mind, ethical climate, corporate ethical values (manager’s

unethical behaviour and rewards and punishments) and interpersonal relationships

(favour-seeking guanxi and rent-seeking guanxi). These variables are presented in Table 15.

Table 15: The variables decomposing subjective norms Dependent variables Independent variables

Subjective norms

Code of ethics: Independence in appearance Ethical climate

Corporate ethical values: Manager’s unethical behaviour Rewards and punishments Interpersonal relationships: Favour-seeking guanxi

Rent-seeking guanxi

As pointed out earlier, another construct of code of ethics is independence in

appearance, which requires auditors to avoid the facts and circumstances that could

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Different from independence in mind, this factor is assumed to be associated with

subjective norms. Organisational ethical context consists of two parts: ethical climate

and corporate ethical values. Ethical climate consists of “the prevailing perceptions of typical organisational practices and procedures that have ethical content” (Victor & Cullen, 1988, p. 101). Corporate ethical values includes two dimensions: manager’s

unethical behaviour and rewards and punishments. Guanxi is utilised to reflect the

Chinese perception of interpersonal relationships (Su et al., 2003). It can be classified into two categories: favour-seeking and rent-seeking guanxi. Favour-seeking guanxi is culturally rooted and related to behaviour of sharing resources with other people (Su et al., 2003). However, different from favour-seeking guanxi, rent-seeking guanxi is generally related to corruption and bribery, since this type refers to power and benefit exchanges (Su et al., 2003).

Therefore, the TPB model will be decomposed by the variables of ethical ideologies (idealism and relativism), code of ethics (independence in mind and independence in

appearance), interpersonal relationships (favour-seeking and rent-seeking guanxi), ethical climate, and corporate ethical values (manager’s unethical behaviour and rewards and punishments). The causal relationships between these variables and the

TPB variables are developed in the following sections.