Journal of Business and Policy Research 8, no. 1 (2013): 100-119

 AUDITORS’ INDEPENDENCE, EXPERIENCE AND ETHICAL JUDGMENTS: THE CASE OF MALAYSIA

 Razana Juhaida Johari, Zuraidah Mohd Sanusi, Rashidah Abdul Rahman and Normah Omar

Abstract


Within the auditing profession, independence and ethical behavior of the auditors are very much related. The auditors’ conduct could determine whether or not they are "seen" or "perceived" to be independent in their action. An experiment with 184 auditors is conducted to examine whether changes in auditors’ independence threats will consistently increase the auditors’ ethical judgments level. This study includes three types of independence threats namely self-interest, familiarity and self-review threats in order to observe their direct and indirect effects on auditors’ ethical judgments. In addition, the interaction effect of auditors’ experience on the relationship between the auditors’ independence threats and their ethical judgments is also being scrutinized. The findings revealed significant positive influence of all the three types of auditors’ independence threats on their ethical judgments. Furthermore, the interaction effects of auditors’ independence threats and experience were also found significant on the auditors’ ethical judgments. Implications of these findings are discussed.