Effect ofguanxiand ethical orientations on Chinese auditors' ethical reasoning

Purpose - – The purpose of this study is to investigate the effect of Chinese auditors' personal values (guanxiand ethical orientations) on their ethical reasoning (ethical judgments and behavioral intentions). In addition, this study aims to explore the joint effect ofguanxiand ethical orientation on auditors' ethical reasoning. Design/methodology/approach - – This study is based on a field survey of 191 auditors working in Certified Public Accounting (CPA) firms that operate in the People's Republic of China (China). Findings - – The main findings indicate thatguanxiand relativism orientations negatively associate with, while idealism orientation positively associates with, auditors' ethical judgments and behavioral intentions. However, when decomposing the overall ethical judgment into three judgment groups, the main effects ofguanxiand ethical orientations on auditors' ethical judgments become marginal and those effects fully hold only when using acceptability as criteria to judge questionable behavior in the vignettes. In addition, the results of the joint effect ofguanxiand ethical orientations indicate thatguanxiorientation weakens both the positive effect of idealism and the negative effect of relativism orientations on auditors' ethical reasoning. Originality/value - – This study contributes the literature by investigating the ethical reasoning of auditors in a country with a relatively weak legal system that relies onguanxi(literally, interpersonal relationships and connections) culture to operate business. Furthermore, this study extends the literature by documenting the moderating effect ofguanxiorientation on the relation between auditors' ethical orientation and their ethical reasoning.