Linking Corporate Institutional Logics and Moral Reasoning – Evidence from Large Danish Audit Firms

This paper examines whether organizational levels of owner/partner, CPA manager, supervisor and other audit staff are associated with institutional logics of auditors in large Danish audit firms. Our findings identify the presence of the professional logic and commercial logic with the professional logic being two explicit logics of a fiduciary and a technical-expertise logic. The organizational levels of CPA manager, supervisor and other staff are significant in explaining the presence of the technical-expertise logic, but not the fiduciary logic. Higher moral reasoning of auditors and being a female are significantly associated with the presence of the fiduciary logic. All four organizational levels are significant in explaining the identified commercial logic with further tests indicating that partners place more emphasis than supervisors on the commercial logic. Additional tests examine whether moral reasoning is associated with the professional fiduciary, professional technical-expertise and commercial logics and whether organizational levels explain moral reasoning. We find that a higher professional fiduciary logic is associated with higher auditor moral reasoning. In contrast, lower moral reasoning is associated with higher professional technical-expertise and commercial logics. In addition, increased audit experience is associated with lower moral reasoning.