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Challenges to Professional Independence in a Relational Society: Accountants in China

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Abstract

This study examines the tensions between the western concept of professional independence and accountants’ commitment to significant others under the care perspective of guanxi. The principle of professional independence is founded on arm’s-length transactions to avoid undue influence on professional and ethical judgement. However, in the relational society of China, social interactions based on Confucianism elicit a duty of care and concern towards significant others in important relationships. For a professional accountant, the commitment to persons with whom they have guanxi is potentially at odds with their commitment to professional independence. Data collected from interviews with Chinese accounting professionals, accounting academics and expatriate accountants working in China provide insight on how Chinese accounting professionals discharge their obligations under guanxi. Notions of guanxi and the rules of exchange identified in Hwang’s (Knowledge and action: A social psychological interpretation of Chinese cultural traditions, Sin-Li, Taipei, 1995) model of “Confucian ethics for ordinary people” provide the lens to explain the ethical dilemmas facing Chinese accountants. The findings suggest that accounting professionals prioritise the interests of their superiors and clients over the users of financial reports. Despite accountants’ moral obligation to protect the public interest, personal and professional obligations in China struggle to extend beyond client or employer interests mostly because of the absence of a formal relationship or connection with the public. This contrasts sharply with the notion of professional independence practised in western societies, where accounting professionals must be independent of their clients and superiors and commit to a duty to protect the public interest. The outcome of this study demonstrates the impediments to transplanting western concepts to different cultures.

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Fig. 1

(adapted from Hwang 1995, p. 233)

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Notes

  1. Confucianism does not believe in a deity figure like God who created life on earth as Christianity or Judaism claims. Therefore, a child’s life is given by its parents and the child is thus obligated to be reverent to the parents.

  2. The Book of Rites (Liji, 礼记) Chapter 9 (Liyun, 礼运): 何谓人义?父慈、子孝、兄良、弟弟、夫义、妇听、长惠、幼顺、君仁、臣忠十者,谓之人义.

  3. The passage in Chinese: 仁者人也、親親爲大。義者宜也、尊賢爲大。親親之殺、尊賢之等、禮所生也. There are different translations available for the passage. For example a translation by Ames and Hall (2001) is: Authoritative conduct (ren, 仁) means conducting oneself like a human being, wherein devotion to one’s kin is most important. Appropriateness (yi, 义) means doing what is fitting, wherein esteeming those of superior character is most important. The degree of devotion due different kin and the degree of esteem accorded those who are different in character is what gives rise to ritual propriety (li,礼). This paper chose Hwang’s translation because it adopts Hwang’s theoretical model.

  4. Renqing is originally defined in the Book of Rites as the seven natural emotions people acquired at birth such as happiness, anger, sadness, fear, love, hatred and desire. 何谓人情?喜怒哀惧爱恶欲七者,弗学而能.

  5. The Book of Rites (礼记), Chapter 1 礼尚往来. 往而不来,非礼也; 来而不往,亦非礼也.

  6. In many Chinese businesses, accountants can be family members. However, in this study, interviewees were not family members of their superiors. Therefore, expressive ties do not apply.

  7. Some clients (particularly SOEs) have the power to register hukou (户口) for their employees. Hukou is a system of registration of residence in China, which is an institutional system to control population movement. Migrant workers are disadvantaged in large urban cities without local hukou (Liu 2005). For example, an accountant’s hometown is in Shang Xi, but he/she works in Beijing. Without a hukou in Beijing, the accountant cannot access medical insurance, cannot enrol his/her children in schools in Beijing, etc. Hukou in Beijing or other major cities is perceived to be a privilege. Some state-owned companies can register hukou for their employees and this is very attractive to migrant workers.

  8. Hwang’s (1987) paper titled “Face and Favour: the Chinese power game” has over 2300 citations as per Google Scholar.

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  1. Auckland University of Technology, 42 Wakefield Street, Auckland, New Zealand

    Gina Xu

  2. RMIT University, GPO Box 2476, Melbourne, VIC, 3001, Australia

    Steven Dellaportas

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Xu, G., Dellaportas, S. Challenges to Professional Independence in a Relational Society: Accountants in China. J Bus Ethics 168, 415–429 (2021). https://doi.org/10.1007/s10551-019-04249-x

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