CHAPTER II

REVIEW OF RELATED LITERATURE

ETHICAL CLIMATE

According to Schneider and Rentsch (1988), as cited by Schwepker (2001), climate refers to the

ways organizations operationalize routine behaviors and the actions that are expected,

supported and rewarded inside the organization. It is like the weather inside an organization;

what employees perceive how things are done around the workplace.

An organization may have a range of a lot of different climates, one of which is ethical climate.

Ethical climate is defined as a subset of organizational work climate, which is best understood

as a group of prescriptive climates reflecting organizational procedures, policies, and practices

with moral consequences (Cullen & Martin, 2006). Further, Victor and Cullen (1988) developed

nine moral climate dimensions which were based on three criteria namely: egoism,

benevolence, or principle and the level of analysis that is individual, local, or cosmopolitan

(Huang, You & Tsai, 2012). The three criteria and three levels of analysis were cross tabulated

and formed the moral climate types initially identified. However, the five climate types found by

Victor and Cullen from their primary work are encountered more recurrently, hence, these five

types provide the majority of the data available for meta-analysis (Cullen & Martin, 2006). The

five ethical climate types are called caring, independence, instrumental, law and code, and

rules.

A firms ethical climate is the basis of its values and behaviours expected therefrom (Wimbush &

Shepard, 1994). It was defined by Victor and Cullen (1988) as the prevailing perceptions of

typical organization practices and procedures that have ethical content (Schweper, 2001).

Another definition of ethical climate by Victor and Cullen (1988) as cited by Huang, You and Tsai
(2012), is that ethical climate is a type of organizational climate which pertains to the climates

reflecting organizational procedures, policies and practices.

Twenty five per cent out of 4000 respondents in a national survey believes that their company

tends to ignore ethical conduct just to meet business objectives while almost seventeen per cent

stated that theirs encourages misconduct to meet the same (Goodell, 1994). Mean while,

Hegarty and Sims believed that corporate goals and policy heavily influence managers

decisions to behave ethically or not.

Lack or no codes of ethics and principles are grounds for an unethical climate. Thus, it is

important to create an ethical climate within an organization. Ferrell and Skinner (1998) stated

that higher levels of ethical behavior were found in organizations where codes of ethics are

enforced. In addition to this, rewards and punishments also affect the decisions of an

organization indirectly depending on the consequences.

Ethical climate has 3 criteria namely: Egoism; Benevolence; Principle. Out of 36 climate types

developed by Victor and Cullen (1988), only 5 are more frequently encountered, namely:

Caring. This climate type falls under the benevolence criterion. Here, atmosphere is based on

concern for others. Individuals have a sincere interest in each others well-being for the people

inside and outside the organization who may be affected by each others ethical decision.

Employees would have a sincere interest for the well-being of their co-employees, as well as

others within and outside of the organization, and who might be affected by their ethical

decisions in an environment which is controlled by a caring dimension of ethical climate. This

just shows that this ethical climate goes with the utilitarian dimension. The policies and practices

of the workgroup would foster concern for those affected by employees' decisions. Not only

would the policies and practices promote this, but most workgroup members would individually

conduct themselves in this manner (Shephard & Wimbush, 1994).

Independence. This climate type falls under the principle criterion. Individuals act according to

their own personal moral beliefs. In this type of ethical climate, it specifies that individuals

believe they should act on deeply held or personal moral convictions in order to make ethical

decisions. In considering their view of the organization, decisions with moral consequences

should accentuate personal moral beliefs with minimal regard for outside forces and external

inuence on ethical predicaments (Cullen & Martin, 2006). The individuals principles, upon

which decisions are made, are assumed to be determined through careful consideration and

understanding (e.g., Schminke et al., 2005; Watley, 2002).

Law and code. This climate type falls under the principle criterion. Law and code requires that

employees adhere to the codes and regulations of their profession. This particular dimension of

ethical climate would require the employees to adhere to the codes and regulations mandated

by their profession or by the government. Nowadays, people tend to make it obligatory for

individuals to look beyond the rules and practices of their organizations to also those of

professional associations for reminders concerning proper behavior (Shephard & Wimbush,

1994). Individuals who are members of a professional association would be apprehensive about

following professional codes of conduct in order not to jeopardize their membership in the said

professional association or lose the respect of their comrades. They would see to it that they are

abiding with the laws governed on their place of work.

Rules. This climate type falls under the principle criterion. This pertains to the rules of conduct

accepted by the firm. An organization characterized by the "rules" dimension of ethical climate

would be comprised of workers who adhere strictly to the organizational rules and policies.

Because of its deontological foundation, this climate requires commitment to rules and

principles. In this case, the rules would serve as a guide for employees' ethical decision-making

(Shephard & Wimbush, 1994).

Instrumental. This climate type falls under the egoism criterion. It is primarily based on the

maximization of self-interest. Employees identifying an instrumental ethical climate perceive

their organizational unit as having norms and expectations that boost ethical decision-making

from an egoistic viewpoint (Cullen & Martin 2006). Furthermore, they perceive that self-interest

guides behavior, even to the potential detriment of others. One believes that decisions are made

that serve the organizations interests or provide personal benets (Wimbush and Shepard,

1994). Even when considered in a variety of contexts, studies consistently show that

instrumental climates are the least preferred (e.g., Cullen et al., 2003; Erondu et al., 2004;

Flannery and May, 2000).

ORGANIZATIONAL COMMITMENT

There are several definitions of organizational commitment but there is a common theme

amongst them wherein the employees who are committed individual believe the organizational

goals and accepts the values of their organization and are willing to stay with their respective

institutions and provide considerable effort on their behalf. (Mowday et al., 1979). Hereafter,

organizational commitment will act as a psychological bond to the organization that influences

the workers to act in ways that are in line with the interests of the organization (Porter et al.,

1974; Mowday and McDade, 1979). In general, the organizational climate is resulting from the

aggregation of psychological climate measures of the employees that come from the same

organization that reects more precisely the organizations true climate. The aggregation will

counter-balance the idiosyncratic parts of individual employees psychological climate measures

(Wang & Hsieh, 2011).

Organizational commitment is commonly defined as the employees interest in and connection

to an organization (Huang, You & Tsai, 2012). When employees believe in the goals and values

of the firm they belong to, they are willing to remain within their organization and exert extra
effort on their behalf (Mowday et al., 1979). Therefore, when employees have organizational

commitment, they tend to act according to the interest of the organization (Porter et al., 1974;

Mowday & McDade, 1979).

Meyer and Allen distinguished the three kinds of organizational commitment namely: Affective

commitment; Continuance commitment; Normative commitment. Katz pointed out three

conditions that would make a firm operate efficiently. These are participating and staying in the

organization, acting according to the behavioural principles regulated by the organization and

automatic devotion to the organization.

Smith et al. later on categorized these three conditions as organizational citizenship behavior

(OCB). Williams and Anderson divided OCB into three dimensions namely IRBs, OCBI and

OCBO. IRBs are the responsibilities of the employees. OCBIs are the behaviours that benefit

specific individuals and indirectly contribute to the organization. Lastly, OCBOs are the

behaviors that benefit the organization in general.

JOB SATISFACTION

Job satisfaction was defined by Locke (1969); Shaffer and Harrison (1998) as the pleasurable

emotional state resulting from the appraisal of ones job as achieving or facilitating the

achievement of ones job values. Job satisfaction may be both intrinsic and extrinsic. Intrinsic

job satisfaction is derived from internally mediated rewards such as the job itself and

opportunities for personal growth and accomplishment, and extrinsic job satisfaction which is

from externally mediated rewards such as satisfaction with pay, company policies and support,

supervision, fellow workers, chances for promotion, and customers (Walker, Churchill & Ford,

1977). Additionally, job satisfaction was explained as a contribution of cognitive and affective

reactions to the differential perceptions of what an employee wants to receive compared with

what he or she actually receives by Samad (2005). It refers to a context that is more restricted
because it focuses on the experiences and perceptions that are related to the individuals own

work (Bssing, Bissels, Fuchs, & Perrar, 1999).

Job satisfaction refers to an individuals emotional orientation toward his or her work (Huang,

You & Tsai, 2012). For Vroom, it is the overall feeling of an employee about his or her work. For

Smith, it is the perception and overall response of a person to his or her work. For Locke, it is

the pleasurable emotional state resulting from the appraisal of ones job as achieving or

facilitating the achievement of ones job values. For Price, it is the employees emotional

attitude toward his or her job.

Smith and others conceptualized the five facets of job satisfaction, namely: satisfaction with

supervisors, satisfaction with co-workers, satisfaction with pay, satisfaction with promotions and

satisfaction with the work itself.

According to Walker et al. (1977), as cited by Schwepker (2001), job satisfaction may be both

intrinsic and extrinsic. It is intrinsic when it comes from internally mediated rewards such as the

self-growth and accomplishment. It is extrinsic when it comes from externally mediated rewards

such as satisfaction with pay and chances for promotion. Policies and supervision both

influence ethical climate and job satisfaction is determined by these two. Thus, ethical climate

might have a significant influence on job satisfaction.

TURNOVER INTENTION

Intention to leave often appears to be the immediate precursor to actually quiting (Schwepker,

2001) and it is commonly endorsed as a predictor of turnover (Mobley, 1982). There are many

definitions given to turnover intention. Meyer and Allen (1984) defined it as the employees

intentions to abandon their organizational membership and quit their current jobs. Tett and

Meyer (1993) defined it as conscious and deliberate wilfulness to seek for other alternatives in

other organizations. Ponnu and Chuahs (2010) definition is the starting point where
employees begin to consider and search for other opportunities seriously once they have

intention to leave the organization, while for Cotton and Tuttle (1986), turnover intention is the

employees estimated probability that they will leave their organizations.

As cited by Muliawan, Green and Robb (2009), Lucy (1998), found that as to Information

Systems, auditors only have an average of four years of IS Audit experience as when IS

auditors get a new position, 47% leave their current organizations to grow out of their careers,

55% coming from those at the supervisory level and 64% from the management level. Gallegos

(1991) hypothesized that career progression, boredom from repetitive tasks and lack of upward

mobility with senior IS auditors may serve as an explanation for the high turnover of IS auditors.

Additionally, as cited by Jannah, Baridwan and Hariadi (2016), Rhode, Sorensen, & Lawler III

(1976) showed in 10 years, initial hires in public accounting has 85% turnover rate. This is due

to the notion that working at public accounting is just a stepping stone for the career of the

newly-hired.

According to Apasu (1986), the greater the congruence between individual and organizational

values, the lower the turnover intention. Thus, when the values of the employee collide with that

of the organization, the employee, most likely will stay while individuals, who believe they do not

fit in the organization they belong to because of contradicting values, will not stay for long

(George, 1990). Therefore, individuals who desire an ethical climate should be less likely to

leave an organization which has an ethical climate. Thus, an indirect relationship between

ethical climate and turnover intention can be assumed here.

ACCOUNTING SECTOR

One sector that constitutes the practice of accountancy is the practice in Commerce and

Industry or also known as the private practice. This shall constitute a person involved in

decision making requiring professional knowledge in the science of accounting, or when such
employment or position requires that the holder thereof must be a certified public accountant.

The private sector of the accounting profession primarily consists of management accountants,

corporate accountants, and internal auditors. Accountants employed in this practice typically

involve themselves in generating reports about the financial performance of the company in

order to assess its ability to generate funds for future use or whether to invest or not in a certain

venture. They also conduct audits within the company they belong in order to maintain the

reliability of the financial statements the management is going to present. Internal auditors in

particular, have the responsibility of ensuring the management that recorded transactions is

accurate to protect the integrity of the company. As the work in the private sector suggests,

accountants employed in this practice tend to work closely related with other people thus

removing the feeling of being isolated within the group (Moyes, D. & Shao, L.,2008).

Ethical work climate built in the private practice differs with that of the public practice in several

factors but it doesnt make one more ethical to the other. It simply explains that both sectors

have a different work climate and that their difference is not a factor to consider one more

ethical over the other. Generally, people in the private sector particularly managers, tend to be

more compliant to ethical standards and are more willing to compromise their organizational

goals to in line it to ethical principles uphold by the organization than those in the public sector

(Bowman, 1976). If the top management itself has little or no value for ethical behavior, there

would be an unfavorable ethical climate within the company that in turn causes job

dissatisfaction. (Omar, N. & Ahmad, Z.,2014) For example, in a company setting, there is an

internal auditor that safeguards recorded transactions and events to prevent the management in

committing fraud, but if the management itself doesnt value uprightness, then the internal

auditor itself would lose sight of the ethical behavior needed to execute his job therefore

producing an adverse ethical climate within the organization. If conflict of interest arises within

the company such as the principal agent problem, where the priority of the other is different as
to the agent, Sims and Kroeck (1994) expressed that it would result to a lack of ethical fit that

may result to distress and latter, de-motivation of employees. A negative relationship between

ethical climate and turnover intention exist. It means that if a company possesses a sound

ethical climate then most likely, fewer employees will decide to leave and look for other jobs that

would value moral principles. Management accountants would find it contradicting if the

company he belongs does unethical doings as oppose to his principle that would make him

choose to leave and look for other companies that will uphold his principles in life.

Several factors may affect an employees level of job satisfaction; some of these are salaries

and benefits, working conditions, management style, and tasks involved as well as challenges

that the position of an employee hold (Moyes, D. & Shao, L.,2008). Certain companies are likely

to develop a higher salary structure that would contribute to a more satisfied employee leading

to contentment and motivation for their work than those of the public accounting firms due to

demand for services. Management accountants are more likely to have clearer instructions from

the management regarding tasks to be done and accomplish because they are more concerned

about a specific matter concerning the company unlike the work of public accountants that are

more rigid and complex. In such manner, it contributes on how well private accountants perceive

management style as a factor on how satisfied they can be especially if the environment allows

them to partake in decision making in a more personal way. Work in the public practice of

accounting demands more time from its employees because of increasing demands in audit

services conducted to several companies compared to the responsibilities of accountants

employed in the private practice. According to previous studies, job satisfaction and turnover

intentions are inversely related. Explicitly stating, if an employee is not satisfied with his job,

tendency is that he will look for another job.

Organizational commitment is the product of satisfied employees on their jobs. (Suliman, 2002;

Bagozzi, 1980; Brown & Peterson, 1994; Reichers, 1985). With that premise, organizational
commitment has a positive relationship with job satisfaction. Another set of factors are

considered in determining whether an employee particularly an accountant is satisfied with his

job. Some of these are sex, age, race, and educational levels (Moyes, D. & Shao, L.,2008).

Wright and Hamilton (1978) said age as factor on how committed an accountant can be argued

that older employees have more sense of commitment than the younger ones for the reason

that younger accountants are driven by a fast pace environment wherein they value promotion

and compensation. Younger generation accountants belong to the technology age thats why

they tend to be more adaptive to the change brought by new technologies than older

accountants making them able to use that potential and apply to other companies that may

provide higher compensation or convenience. This scenario holds true that organizational

commitment is higher with those of older accountants than the younger ones. Aldag and Brief

(1975) also expressed that older accountants hold more sense of meaningful work experience

compared to new breed of accountants. As to gender, 82% of male accountants are satisfied

with their jobs compared to just 57% of female accountants (Takhtaei, N. & Dezfully, L., 2013).

According to Parent, DeAngelis, and Myers, female accountants have appeared to face a

significant difficulty balancing their work as accountants and family responsibilities than male

accountants. Accountants in the private sector may lose commitment to work due to aspects

that might cause a conflict to their priorities most especially if it is family related. Females place

less emphasis on status, financial reward and position, and greater emphasis on achieving

personal goals and gaining recognition from others (Dann, 1995). Organizational commitment

and turnover intention has an inverse relationship. The more committed an employee is to his

work the lower the turnover intention.

Those who graduated in the program of Bachelor of Science in Accountancy can also work as

auditors in different firms. Auditors job can be strenuous especially during the audit season

which is one of the reasons of a high turnover rate in the auditing profession. In order to identify
and deeply understand the nature of how auditors work, there had been many previous studies

which discussed the ethical climate, job satisfaction, organization commitment and turnover

intention of auditors in the public accounting firm.

According to a study of Jannah, Baridwan and Hariadi (2016), turnover intention of auditors can

be influenced by role conflict and organizational commitment. Organizational commitment can

then be measured by their affective and continuance commitment (Karavardar, 2014). The

researchers also added that turnover intention cannot be influenced by job satisfaction, role

performance and role ambiguity. Auditors, especially those that are first time employees dont

really care on whether they are enjoying their jobs because all they want is to have an

experience on auditing. Most auditors care more about how their job and work load fit them well

and not about the financial rewards and the salary that they are going to get in their firms

(Pradana & Salehudin, 2015). Once the auditors feel that they cant carry their jobs anymore,

there is a big possibility that they are going to find a new firms to work in. Aside from that, they

are also willing to stay in the organization if they are getting what they need and had already

established an emotional attachment inside the organization. Good corporate governance and

management can keep their auditors from leaving the organization because of a more peaceful

and conflict-free environment which most of the auditors want.

Generally, high levels of organizational commitment could lead to higher performance, greater

satisfaction and lower turnover (Mathieu & Zajac, 1990). Climate accounts for twenty one per

cent of the variance in teachers commitment to their organizations. Likewise, marketing

professionals are examined and ethical values were found to be significant predictors of

organizational commitment. In the sales force, the more that salespeople perceive their

organizations climate as ethical, the higher their reported levels of job satisfaction. Another

thing is that mostly female hospital employees were found to be more committed to their
organization when their preferred ethical work climate and their actual ethical work climate

match (Sims & Kroeck, 1994).

There are also other factors that can influence the turnover intention of auditors. As cited by

Ahmad and Ohmar (2014), the turnover intention in the auditing firms is known to be high due to

the high level of voluntary turnover among professional auditors who wanted to experience

working in other firms. (Rhode et al., 1977; Ferris, 1981; Bullen & Flamholtz, 1985). In

order to overcome these negative consequences of turnover intention, the factors that can

influence it must be studied. Pradana et. al (2015) analyzed how work overload influences

turnover intentions of newly hired junior auditors in public accounting firms and the mediating

variables used were job satisfaction, work related stress and work life conflicts. In contrast to

what was stated above which stated that turnover intention cannot be influenced by job

satisfaction, the study showed that job satisfaction is inversely related with turnover intention,

which means that as job satisfaction of the employees increase, their turnover intention

decrease. It was also supported by the study of Muliawan, Green & Robb (2009) which argued

that job satisfaction has positive relationships with organizational commitment and both have

direct negative effects on the turnover intentions of auditors. Folami & Bline (2012) also stated

that auditors must be satisfied with their jobs because it is the antecedent to the employees

intent to leave the firm. Ahmad & Ohmar (2014) agreed that both job satisfaction and

organizational commitment were both significant factors that can influence the turnover

intentions of auditors. It was also implied that job satisfaction had an effect on organizational

commitment. The researches however added ethical climate in their study because it is about

the relationship of ethical climate, job satisfaction, organizational commitment and turnover of

external auditors in Malaysia. The instrument in this study will be replicated by the researchers

as it is similar to what the researchers want to study in Philippine setting. The study stated that
ethical climate is directly linked with job satisfaction however is inversely related with the

auditors turnover intention.

In additional to that, it is also discussed that only work related stress such as being emotionally

drained, frustrated with their work, having destructive tendency, feeling of being hopeless,

burned out, being angry and depressed most of the time and being bored with their work can

mediate the influence of work overload on the turnover tendencies of junior auditors. On the

contrary, work-life conflict such as sacrificing family time, prioritizing job over personal life, being

unable to separate work and life and having complaints from loved ones doesnt significantly

influence turnover intention because in most newly hired auditors, work-life conflicts might not

be an important consideration to their career decision (Pradana et. al, 2015).

On the other hand, job stress can be a factor in studying job satisfaction and organizational

commitment (Masihabadi, Rajaei, Koloukhi & Parsia, 2015). A total of 200 questionnaires were

distributed to auditors but only 170 questionnaires were useful. In this study, it was concluded

that job stress had a negative effect on both organization commitment and job satisfaction and

there was not a negative connection between job stress and job performance. Job stress have a

negative effect on job satisfaction, however, it wasnt confirmed whether job stress can affect job

performance negatively or not.

When it comes to job satisfaction and organizational commitment, the ethical climate of the

auditors can also be considered. Ethical climate can be narrowed down to five types which are

caring, independence, instrumental, law and code, and rules. These different types can have a

different influence to job satisfaction and organizational commitment (Ismail, 2015). The only

type that can affect it was the caring ethical climate. It was concluded that the higher the

perceived caring ethical climate type the organization have, the higher the possibility that the

auditor will stay in the organization.

There are also previous studies that are related to other types of auditors such as healthcare

internal auditors and systems information auditors. Employees emotional attachment, as one of

the types of organizational commitment, is the only type that has an influence in the turnover

intention of healthcare internal auditors (Sow, 2015). This only means that these auditors value

the relationships that they have within the organization and they want the feeling of being linked

and connected with their colleagues. For the healthcare internal auditors to stay in the

organization, the most important variable for them to stay in the organization is to have the

feeling of belongingness (Balassiano & Salles, 2012). When it comes to information systems

auditors, role conflict, satisfaction with pay and fulfilment of growth needs are the main factors

that affect their turnover intentions. (Muliawan et. al, 2009). The researchers also added that

personal growth and development within the organization is also important to the auditors and

fulfilling this will make them stay in the organization.

There has been numerous researches that studied the relationship of ethical climate, job

satisfaction, organizational commitment and turnover intention with each other in various fields

of work. Being an external auditor is one of the possible jobs that an accounting student can

have after they graduate and due to that, we, the researchers, decided to study on the effect of

the prevailing ethical climate, job satisfaction and organizational commitment of external

auditors here in the Philippines since there is still no published paper regarding that topic in the

country.
THEORETICAL FRAMEWORK

Turnover intention is defined as the starting point where employees begin to consider and

search for other opportunities seriously once they have intention to leave the organization

(Ponnu & Chuah, 2010). This is crucial with auditing firms given their high rates of employee

turnover that affects them because of the costs incurred especially from training. They cannot

recover their initial investments since the employees leave the auditing firms early. Accordingly,

several factors including the organizations ethical climate and the auditors job satisfaction and

organizational commitment affect the turnover intention. All these things should be taken into

consideration to be able to draw conclusions that will in return help the firms in taking the proper

actions to address the firms difficulties and problems.

This study is outlined by the following theories relating to ethical climate, job satisfaction,

organizational commitment, and turnover intention. The researchers considered the cognitive

discrepancy theory, self-determination theory, ethical climate theory and the theory of reasoned

action. The stated theories have been utilized in research from different fields and specifically

chosen as they arise from studies relating to auditors.

One of the theories to be used in this study is the cognitive discrepancy theory which

emphasizes on the expectations of the employees from the company and the fruits gained by

the employees from their work. It relates to the job satisfaction of the employees towards their

work. The employees will be satisfied when the gap between expectation and perception of

reality does not exist (Jannah, Baridwan & Hariadi, 2016). As studied by Koh and Boo (2004),

employees are expected to have a higher level of job satisfaction than the usual when they

perceive strong top management support for a positive ethical climate and a strong link between

career success and ethical behavior in the organization.

Another theory to be utilized is the self-determination theory of motivation which represents a

broad framework for the study of human motivation and personality. This theory relates to

organizational commitment. The theory was originally developed by Deci and Ryan (1985), and

from then on it has been expounded and advanced by succeeding studies. According to Deci

and Ryan (1985), the self-determination theory of motivation emphasizes on the identification

and gratification of three psychological needs which is autonomy, competence, and relatedness.

Competence is experienced when a person is challenged and given prompt feedback. For

autonomy, it is when a person is given a chance to explore, to take intiative to solve problems

and come up with solutions. When a person perceive others responding to him, relatedness is

felt in this matter. Deci and Ryan suggest that when people experience these three things stated

above, they come to be motivated intrinsically to chase the things that they want to pursue, and

become self-determined. According to Robson, Schlegelmilch, and Bojkowszky (2012), theorists

of self-motivation consider the need of every individual to make a choice without interfering with

others. The needs arising from this motivation effects the three types of organizational

commitment which is affective commitment, continuance commitment, and normative

commitment (Meyer & Parfyonova, 2010).

Consequently, the ethical climate theory is the type of work climate that is best understood as a

group of prescriptive climates reecting the organizational procedures, policies, and practices

with moral consequences (Martin & Cullen, 2006). The said climates arise when members of

the organization believe that distinguished forms of ethical reasoning or behavior are standards

or norms that are expected for decision-making within the rm.

Lastly, the theory of reasoned action is useful in explaining the relationship between employee

engagement, compensation fairness, job satisfaction, and turnover intent (Berry, 2010). It

clarifies that intention is the top predictor of actual behavior (Ajzen and Fishbein, 1980).

According to Berry (2010), the basic concept of the theory of reasoned action has been fused

into a number of models that explains employee turnover and its predecessor which is job

satisfaction. This theory also recognizes that there are factors or situations that limit the

influence of attitude on behavior. The researchers considered the stated theories for the

framework of the study.

CONCEPTUAL FRAMEWORK

The figure above shows the diagram of the conceptual framework of this research. The

study aims to determine the relationship between the auditors prevailing ethical climate, job

satisfaction and organizational commitment to its turnover intention. Adapted questionnaires for
the factors shown above, together with their demographic profile, are prepared and validated for

its reliability by the researchers using the Cronbach Alphas test. The researchers will gather

data to know the prevailing ethical climate on auditing firms first and afterwards, the perceived

ethical climate, together with the auditors job satisfaction and organizational commitment will be

analyzed to know its relationship with turnover intention. From the literature review, it has been

shown that turnover intention of auditors can be influenced by role conflict and organizational

commitment (Jannah, Baridwan & Hariadi, 2016). Consequently, Folami and Bline (2012) stated

that auditors must be satisfied with their jobs because it is the antecedent to the employees

intent to leave the firm. In addition, Ahmad and Omar (2014) determined that ethical climate is

directly linked with job satisfaction while it is inversely related with the auditors turnover

intention.