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The effects of institutionalization and structuring in the public accounting profession are considered in relation to the development of education and experience requirements for the profession. The goal is to explain the development of education and experience requirements for public accountants from a broader perspective and improve our understanding of the changes which have taken place in the profession and which are still taking place.

By its nature, the capitalistic economic system has produced numerous ethical conflicts. The professions, as well as business in general, have been impacted by the increased emphasis on ethical behaviour. In the past few years, there has been an increased interest in business ethics. One profession which has especially grown due to the increased awareness of ethical issues is internal auditing. This has been in part due to the need for more reliable accounting records, tighter administrative controls, and improved operational efficiency. In order to provide some guidance to its members regarding ethical behaviour, the Institute of Internal Auditors has constructed a code of ethics. Describes how, through the use of a questionnaire, the views of practising internal auditors regarding the currently used code of ethics were obtained and analysed. The responses revealed that a substantial number of internal auditors do consult the code of ethics for guidance in making ethical decisions. A majority of the auditors believe that the code of ethics could be more effective if better enforcement methods were put into effect. Most respondents also believe that the code is complete as it is currently written and does not need to be expanded.

Research on organisational socialisation typically assumes that the newcomer′s adjustment to the organisation is directly affected by the earlier professional socialisation process at the university. An important area of research has focused on the relationship between the structure of educational institutions and the organisational socialisation process. While previous studies have tended to focus on the professional orientation of students, this study focuses on auditors as they advance in the profession. The findings indicate that there are significant differences both in advancement rate and retention rate among auditors from unaccredited, accredited, and professional schools of accountancy and that the significance of the differences increases with time.

The purpose of this paper was to explore the motivation and rationale behind international investment to better explain the conflicting results reported in previous research and to provide some answers to the current debate on international diversification. Monthly return data and annual financial data of 424 NYSE‐listed companies over four 5‐year periods was examined, dividing the sample companies into three groups according to their degree of international diversification. Averages for monthly returns, market‐adjusted returns, total risk, and systematic risk were analyzed. An ongoing debate among students of multinational corporations (MNCs) focuses on whether the intent of corporate international diversification has been to increase stockholders' return or to reduce risk (Siegel et al. 1992; Shalchi and Hosseini 1990; Ndubiuzu 1990; and Theerathom et al. 1992). Based upon the observation of the pattern of holdings, Buckley (1988) argues that firms do not become MNCs to reduce risk. Risk reduction behavior would lead to a strategy of seeking investments in countries with uncorrected return patterns, as with some of the underdeveloped countries. Instead there has been a concentration of foreign direct investments in advanced market economies with high return correlations among each other. Buckley (1988) concludes, therefore, that MNCs are imperfect vehicles for risk diversification. Fatemi (1984) suggests that much of the international diversification made by corporations may have a defensive purpose. Their goal may be, for example, to maintain participation in some export markets or to match the previous move of a competitor, and not necessarily to increase the firm's revenue. The motivation for foreign corporate investments has been attributed to many specific factors, related both to the firm and the country. Included among these factors are: (a) economies of scale associated with large size and the ability to produce in several countries, (b) intangible assets, such as technological expertise or entrepreneurial skills, (c) market power due to the size of markets and previous experience with the domestic market, (d) industry grouping, (e) the availability of additional natural resources, as well as less costly labor and/or capital, (e) advantageous regulatory framework for the firm offered by the host country, and (f) the economic influence of the particular time period involved on firms and countries. The purpose of this paper is to provide additional evidence on whether international diversification has either increased stockholder's return or reduced their risk and to consider the possible influence of several factors. A sample of 424 companies was drawn from the New York Stock Exchange (NYSE), and was divided into three categories, i.e., domestic, intermediate, and multinational. Two return and two risk measures were then calculated for four periods of time (1968–1972, 1973–1977, 1978–1982, and 1983–1987) to examine the relationships between the degrees of international diversification and the measures of risk and return. One of our concerns was to try to address some of the discrepancies among prior research findings.

The purpose of this study is to examine mentoring as an important resource in coping with rapid organizational change during the merger of two international accounting firms. Shortly after their merger, 28 pairs of management advisory services (MAS) professionals, i.e., protégés and their mentors, within the two merged firms were interviewed concerning the role mentoring played as an adaptive mechanism in dealing with changes caused by the merger. Both firms examined in the study used a formal mentoring system. In the study, we examined three broad areas. First, whether or not there had been a shift in the type of mentoring relationships from career development to the psycho‐social function in order to deal with the emotional trauma and stress of changes created by the merger, and how extensive this shift had been across the different levels of the merged firm. Second, what the emphasis was between the informal mentoring and formal mentoring within the merged firm, and how useful the participants found the two in dealing with the higher level of uncertainty in the work environment. In addition, a third research area emerged during the interview process. Differences in the communication structure of the two former firms appeared to be related to how well the participants were able to deal with changes caused by the merger and to affect the type of mentoring relationships they preferred.

Formal mentoring programmes have developed in public accounting firms in order to gain career development and organizational advantages and, although there is substantial literature concerning problems with formal mentoring programmes, there are few studies which actually have compared the mentoring process at firms with a programme with those using an informal process. Compares mentoring activities at each level in two accounting firms, one using a formal mentoring programme and the other an informal approach, to see how they differ. Qualitatively, no significant differences were found between the two approaches on the perceived influence for career development. Differences were found, though, regarding the respondents′ personal development and the numbers of mentor relationships between the two types of approaches. Concludes that personal development tended to be rated higher under the informal than the formal approach at the critical staff and senior levels. Regarding numbers of mentor relationships, the results indicate that the significant differences were related to rank.

To examine whether auditor‐client relationships have an effect on the decision by an auditor to remove an audit qualification.

The paper tracks the event history of a sample of firms from the issuance of a first time audit qualification for going concern and non‐going concern contingencies (initial qualification issued between 1983 and 1987, all pre Statement of Auditing Standard (SAS) 58) to the issuance of a clean opinion (up through 1995 when SAS 79 was issued). Attachment theory provides a theoretical framework for the variables analyzed and discrete time survival analysis is used as the statistical method in the analysis so as to evaluate each company year from the initial unclean opinion to the year a clean opinion is issued.

It is found that interpersonal and interorganizational attachment has a significant impact on those opinion decisions that require more auditor judgment (i.e. going concern).

This study examines the linkage between auditor tenure and audit quality in a broader context than has been examined to date. Using attachment theory for the foundation, auditor tenure can be viewed as but one measure of the attachment between auditors and clients. In this study, a number of measures of both interpersonal and interorganizational attachment between auditors and clients are included. Further, auditor opinion judgments are examined as a determinant of auditor quality. Finally, discrete‐time survival analysis is employed which allows the tracking of the entire event history from initial qualification to removal of the qualification, something not possible with most standard statistical techniques.

Institutional theory is becoming one of the dominant theoretical perspectives in organization theory and is increasingly being applied in accounting research to study the practice of accounting in organizations. However, most institutional theory research has adequately theorized neither the institutionalization process through which change takes place nor the socio‐political context of the institutional formations. We propose a social theory based framework for grounding and expanding institutional theory to more fully articulate institutionalization processes. Specifically, we incorporate institutional theory and structuration theory and draw on the work of Max Weber in developing a framework of the context and the processes associated with creating, adopting and discarding institutional practices. We propose that the expanded framework depicts the socio‐economic and political context better and more directly addresses the dynamics of enacting, embedding and changing organizational features and processes. Expanding the focus of the institutional theory based accounting research can facilitate a more comprehensive representation of accounting as the object of institutional practices as well as provide a better articulation of the role of accounting in the institutionalization process.

Prior to the sudden collapse of large companies following the turn of the century and the implication that the auditing of these enterprises had failed, the large public accounting firms sought to re‐engineer the audit. A comprehension attempt to convert that which had been designed as a social good into one more aligned with a commercial logic was halted by the legislative response to this departure from classic professionalism. Recent developments suggest that change in this direction is regrouping. The purpose of this paper is to provide a reflective analysis of the thoughts of the authors on the early development of the new audit approach.

Most of the information in the piece was garnered from conversations with public accounting partners during the era in question. Logical argumentation derived from the academic and theoretical literature is the primary method.

Attributes of the firms' strategies during this period are outlined. Features of the new audit are developed, especially as they vary from the traditional audit. These techniques and approaches are analyzed in terms of their ability to serve the public interest. This paper argues that motivating factors of the new audit will continue to be a force even in the more hostile regulatory environment of today.

An appreciation of the findings of the study is useful in maintaining a level of skepticism about changes to the audit that are advocated by audit firms. Users of audit services, regulators, and legislators would benefit from an appreciation of the recent past. The motivating factors underlying these changes to audit environment continue to operate over time as the social purposes of the audit are less likely to be converted by the firms to ones that can be commercially exploited.

The study contributes insights into the origins of the new business audit approach and related strengths and limitations. These factors should be considered as the approach is developed and moves forward into the future in order for the audit approach to be effective in performing its social functions.