The Mediating Role of Ethical Leadership in Reducing Creative Accounting Practices Among Accountants

Posted: Aug 12, 2021

• Emily Johnson
• Emily Mitchell
• Emily Torres

Abstract

This research investigates the complex relationship between ethical leadership and creative accounting practices within contemporary accounting environments. While previous studies have examined ethical leadership and accounting misconduct separately, this study introduces a novel mediation framework that explores how ethical leadership functions as an intervening mechanism between organizational ethical climate and the reduction of creative accounting practices. The research employs a mixed-methods approach combining quantitative survey data from 342 professional accountants across multiple industries with qualitative interviews to provide rich contextual understanding. Our findings reveal that ethical leadership does not merely directly influence accounting behavior but serves as a critical mediating variable that transforms organizational ethical policies into practical accounting conduct. The study demonstrates that ethical leaders act as ethical translators, interpreting and implementing abstract ethical principles into daily accounting decisions, thereby reducing the incidence of creative accounting practices. Furthermore, the research identifies specific leadership behaviors—such as ethical role modeling, transparent communication, and consistent ethical reinforcement—that significantly impact accountants' decision-making processes. The results challenge conventional wisdom that focuses primarily on compliance-based approaches to accounting ethics and instead highlight the importance of leadership-mediated ethical environments. This research contributes to both accounting ethics literature and leadership studies by providing a comprehensive framework for understanding how ethical leadership operates as a mediating mechanism in professional accounting contexts.