Which Is More Concerning for Accounting Professionals-Personal Risk or Professional Risk?

Abstract

Personal and professional risks have been considered separately in research. However, these two concepts have not so far been investigated in research together. In this study, we first tested the importance of these two risks for Iranian accounting professionals through trade-off scenarios. The analysis of data gathered from an online survey of 487 Iranian accounting professionals shows that accounting professionals in Iran prefer to avoid personal risk rather than professional risk when facing a choice between personal and professional risk. Iranian accountants and auditors are personal risk averters and professional risk lovers, even though they think they are not risk-averse in their personal lives and not risk takers in their professional lives. Therefore, there is a gap between Iranian accounting professionals’ thoughts about their personal and professional risk aversion and their personal and professional risk aversion in practice. Furthermore, we found significant relationships between accounting professionals’ gender, religiosity, welfare, and personal risk aversion. In addition, there are significant relationships between accounting professionals’ gender and personal and professional risk aversion.

1. Introduction

Risk is an essential concept in different sciences. For instance, in finance, the concept of risk and return is common; in medical science, there is the concept of risk and side effects; in environmental science, there is ecological risk; in engineering, the concept of safety and risk is prevalent; and so forth. Although Knight [1] defined risk as uncertainty to happen a phenomenon, most people consider risk as the possibility of something bad happening. In Persian (the official language of Iran), risk is a synonym for danger, and a person who takes a risk is considered to be putting herself/himself in danger. Therefore, risk is considered essential in decision-making, particularly for accounting professionals.

It is claimed that most people are risk-averse [2]. This claim is true for accounting professionals. They are conservative and react prudently to uncertainty [3,4]. They also prepare better reports by practising conservatism [5]. The accounting literature also supports this behaviour of accounting professionals [6]. Brennan and Hamlin [7] believe there is a relationship between risk aversion and conservatism. Francis et al. [8] show a direct relationship between the risk aversion of chief financial officers (CFOs) and accounting conservatism.

The risk aversion of accounting professionals has been investigated in some research. For example, in a survey conducted by Hartog et al. [9], most participating accountants were risk-averse. Hoitash et al. [10], meanwhile, concluded that accountant CFOs are more risk-averse than non-accountant CFOs. Lennox and Kausar [11] claim that auditors are conservative and risk-averse. Helliar et al. [12] concluded that accountants are more cautious and risk-averse than managers. In general, it can be said that accounting professionals tend to avoid risk.

However, the question is, why do accounting professionals commit fraud [13]? Why might they not adhere to their reporting obligations [14]? Why might they involve themselves in financial scandals [15]? In the case of Enron (an American energy, commodities, and services company bankrupted in 2001), why should employees of Arthur Andersen (formerly one of the big five accounting firms found guilty of crimes in the firm’s auditing of Enron) be involved in the scandal? Which kind of risk was more important to them: Professional or personal risk? When they decided to write their report, did they consider the loss of their most profitable client? Or did they consider court, penalties, and imprisonment?

The purpose of this paper is to answer questions such as the above. In this research, we investigated whether Iranian accounting professionals are risk-averse. We also investigated their attitude toward personal and professional risks. Furthermore, we compared their belief about the level of their risk aversion with the amount estimated through their reactions to some risky activities and scenarios. Finally, we investigated whether there is a gap between risk aversion beliefs and behaviours.

Although personal and professional risks have been analyzed separately in different research e.g., [9,16,17,18,19], no paper exists on the trade-off between those risks from the viewpoint of accounting professionals. Therefore, this paper is novel in the accounting literature in examining accounting professionals who commit financial crimes or neglect regulations to enable their businesses to survive and accept personal risk to avoid professional risk. In addition, those who avoid meeting their clients because of the fear of pandemics such as COVID-19 are hurting their businesses to avoid personal risk. Therefore, a dilemma is forming here: which risks are more critical for accounting professionals: personal or professional risks? When you review the accounting and risk literature, no paper will answer this question. Therefore, we have considered this dilemma for the first time in order to enrich the accounting and risk literature.

This research can help Iranian regulators and standard-setters to ratify better regulations and standards for the accounting profession. Iran is the riskiest country in the world [14], and its corruption perception index, with a score of 25, tells us it is also one of the most corrupt countries [20]. It has also been blacklisted by the Financial Action Task Force (FATF) and some other international agencies [21]. Therefore, financial oversight bodies such as auditors and financial experts such as accountants must do their duties in the best possible way to extricate Iran from this predicament. What if accounting professionals refuse to do their best because of a fear of losing their jobs? One of the possible consequences will be an increase in fraud and corruption, Iran’s image in the world will be worse, and this cycle will be repeated. If accounting professionals tend to avoid professional risk more than personal risk, regulators and standard-setters should increase their personal risk with tougher penalties for misconduct and deviation. On the other hand, if accounting professionals are more concerned about their personal risk, regulators can support them by encouraging rules and regulations. There is no reward for whistleblowing in Iran, and no government agency would enable the reporting of suspicious cases. Therefore, the consequences of whistleblowing or reporting suspicious cases for Iranian accounting professionals are more detrimental than for their counterparts in other countries.

The rest of this paper is structured as follows. In the following section—a literature review—risk, risk aversion, personal risk, professional risk, and factors influencing individuals’ risk aversion are described. The research methodology section presents information about the statistical population, samples, and questionnaires. The research results are presented in the findings and results section, and finally, the last section is dedicated to the research summary and conclusion.

2. Literature Review

2.1. Risk and Risk Aversion

Each science has its own definition of risk. For example, it is defined as the probability of a certain outcome after a certain exposure in epidemiology [22]. In finance, it is defined as the possibility of deviation of actual future returns from the expected returns [23]. In environmental science, risk is defined as the probability and frequency of occurrence of a particular hazard and the magnitude of its consequences [24]. Therefore, as Fischhoff et al. [25] have said, there is no unique definition of risk.

Some define risk as the possibility of losing something valuable [26]. Others define it as a catastrophe that has not yet been revealed [27]. Adams [28] defined risk as the probability and utility of future events. Risk in the ISO/IEC [29] standards was defined as “the combination of the probability of occurrence of harm and the severity of that harm.” There is also a short definition of risk, which is the effect of uncertainty within a management area [30]. The Society of Risk Analysis (SRA) has provided an excellent overview of risk definitions:

“1. Risk is the possibility of an unfortunate occurrence

2. Risk is the potential for the realization of unwanted, negative consequences of an event

3. Risk is exposure to a proposition (e.g., the occurrence of a loss) of which one is uncertain

4. Risk is the consequences of the activity and associated uncertainties

5. Risk is uncertainty about and severity of the consequences of activity for something that humans value

6. Risk is the occurrences of some specified consequences of the activity and associated uncertainties

7. Risk is the deviation from a reference value and associated uncertainties”.

[31]

According to the above definitions, uncertainty and negative outcomes are the clear characteristics of risk. Therefore, it is expected that most people tend to avoid risk [2]. However, people are categorized into risk-averse people, risk-neutral people, and risk lovers [32,33]. Risk-neutral people are indifferent between risky options. Risk lovers seek riskier choices and have an increasing marginal utility. On the opposite side, Risk averters always select the less risky options and have a declining marginal utility [34].

Harrison and Elisabet Rutström [35] considered risk attitudes synonymous with the utility function. If an individual’s risk aversion is weak, her/his utility function will be convex, and if an individual’s risk aversion is strong, her/his utility function will be concave [36]. This means a risk averter enjoys greater wealth at a diminishing rate [32].

It is claimed that accounting professionals are risk-averse [37,38,39]. Therefore, in this research, we first investigated Iranian accounting professionals’ opinions about their risk aversion. We then tested their risk aversion through some questions. Finally, we compared their expected and real risk aversion to find the potential gap.

Some methods measure the risk preference or risk aversion of different people. For example, Heinrich and Shachat [18], Andersson et al. [40], Galliera and Rutström [41], and Liu and Treich [42] used a lottery to measure risk preference. Weber et al. [43], Beauchamp et al. [44], and Nicolaou and Shane [45] used their respondents’ attitudes towards risky options as their risk aversion index. Mentzakis and Sadeh [19] used gambling to measure risk aversion. On the whole, Schoemaker [46] believed that risk preference had been derived from three methods: Ranking of gambles, attitude survey, and physiological measures. In this research, in common with Weber et al. [43], we used the second method–the attitude of respondents towards risky options–to measure the risk aversion of our sample respondents.

2.2. Personal Risk and Professional Risk

In the risk literature, different types of risk have been proposed. For example, Fischer et al. [47] listed the risk concept into 12 categories: car or plane accident, other accident, disease, crime, economic, personal, war, fire, environmental hazards, natural hazards, technological hazards, and other risks. Weber et al. [43] narrowed this list to a shorter one, including financial, health, ethical, recreational, and social risks. Since everybody has a personal and professional life, we shortened types of risk into two main categories: Personal risk and professional risk.

“Personal risk is anything that exposes you to the risk of losing something of value” [48]. Rothman et al. [49] asked their sample respondents to put themselves in a situation experiencing 10 hazards to measure personal risk. Sjöberg [50] compared the personal risk of his sample respondents with general risk by asking them to rank 34 hazards and the possibility of protecting themselves from those hazards. In this research, we measured personal risk by asking our respondents to rank the likelihood of performing nine risky activities.

On the other hand, professional risks are those that people face in their professional lives. Professional risk contains benefits, but can harm. If a person makes a decision negligently and causes loss to somebody, he/she can be sued [51]. In the accounting environment, conflict of interest and misaligned incentives, such as fear of loss, workplace pressures, and the temptation of gain, put accounting professionals at risk [52]. Financial pressures and fear of losing their jobs tempt accounting professionals to neglect their professional risk [13,53]. Therefore, personally risk-averse accounting professionals may be willing to run some professional risks. Therefore, the question is: when Iranian accounting professionals face the choice between personal risk and professional risk, which one will be their priority? Are they willing to bear one of them in order to avoid the other?

Since professional risk puts people in a dilemma rather than a hazardous position [51], we have used scenarios to measure professional risk.

2.3. Factors Influencing Individuals’ Risk Aversion

Different factors can influence one’s risk aversion. Most studies found that gender and age significantly affect individuals’ risk aversion [54]. For example, Charness and Gneezy [55] concluded that women are more risk-averse than men. Defoe et al. [56] concluded a positive relationship between age and risk aversion using the meta-analysis method, which means older individuals are more risk-averse.

Noussair et al. [57] investigated the relationship between religion and risk aversion. They found that more religious people are risk-averse. They also found that Protestants are more risk-averse than Catholics. Other control variables in their research were gender, age, marriage, income, health, education, employment, and passport.

Halek and Eisenhauer [58] investigated the demography of risk aversion. They found that unemployed people are more willing to gamble; women are more risk-averse than men; self-employed people are more inclined to avoid risk in comparison to people who work for others; education, age, gender, race, religious beliefs, wealth, drinking, and marriage affect the individual’s risk aversion.

Some studies have considered career factors influencing risk aversion. For example, Pfeifer [59] concluded that risk-averse people are more willing to work in the public sector. Di Mauro and Musumeci [60] found a significant relationship between employment stability and risk aversion. Ayaita and Stürmer [61] and Nguyen [62] concluded that work experience significantly affects individuals’ risk aversion. The individuals’ risk aversion also varies according to their working environments [63]. He and Hong [63] concluded that people working in a risky environment have a higher risk aversion.

According to the risk literature, we expect statistically significant relationships between variables presented in Figure 1. We expect Iranian female accounting professionals to be more risk-averse than their male counterparts e.g., [64]. We also expect older and more experienced accounting professionals to be more risk-averse than their younger counterparts e.g., [65,66]. We expect that the risk aversion for high-earning accounting professionals will be lower e.g., [9]. Accounting professionals in the public or government sector are expected to be more risk-averse than their counterparts in the private sector e.g., [67]. Finally, we expect more religious accounting professionals to be risk-averse e.g., [68]. There is expected to be a significant relationship between personal risk aversion and professional risk aversion among Iranian accounting professionals. The related factors that might affect individuals’ risk aversion are summarized in

Table 1. Factors that might affect individuals’ risk aversion.

Variables.	Related Researches	Tested Sign	Expected Sign
Gender	Lilleholt [54]; Charness and Gneezy [55]; Noussair et al. [57]; Halek and Eisenhauer [58]; Hardies et al. [64]	+/−	−
Age	Lilleholt [54]; Defoe et al. [56]; Noussair et al. [57]; Halek and Eisenhauer [58]; Ismail et al. [65]; Martin and Previts [66]	+/−	+
Welfare	Noussair et al. [57]; Halek and Eisenhauer [58]; Hartog et al. [9]	+/−	−
Work experience	Ayaita and Stürmer [61]; Nguyen [62]	+/−	+
Job	He and Hong [63]; Halek and Eisenhauer [58]		+
Working sector	Halek and Eisenhauer [58]; Pfeifer [59]; Bellante and Link, [67]	+	+
Religiosity	Noussair et al. [57]; Halek and Eisenhauer [58]; Omer et al. [68]	+/−	+

.

3. Research Methodology

3.1. Data and Sample

The statistical population of this research is comprised of all Iranian accounting professionals. Unfortunately, there are no formal and exact statistics on the number of accounting professionals in Iran. However, according to Iran’s statistical yearbook for 2018 to 2019 [69], 100,000 college students graduate on average yearly. If we suppose that accounting students make up 1% of graduated students, 1000 accounting students are expected to graduate each year. If we suppose the career span of each graduated accounting student to be 40 years, it is estimated that there will be 40,000 employed accounting professionals in Iran.

As our sampling method was convenience sampling, we chose our research sample from Iranian accounting professionals whose accounts on social networks such as LinkedIn and Telegram were available. Therefore, we sent the online research questionnaire to more than 3600 Iranian accounting professionals and received 487 responses (13.5% of the research sample). According to Cochran’s formula [70], for 40,000 people at the 95% confidence level, 381 responses should be received. Because our responses exceeded 381, it can be concluded that the research sample can be an accurate reflection of the research population, and our findings are reliable.

3.2. The Questionnaire

The research questionnaire consisted of five sections. The respondents’ demographic information was sought in the first section of the questionnaire. The first section asked for respondents’ demographic information, including gender, age, work experience, job, working sector, religiosity, and welfare. We considered two categories for gender: number 1 for women and number 2 for men. We also thought of three categories for a job: number 1 for the respondents working as an accountant, 2 for the respondents working as an auditor, and 3 for the other respondents. Finally, we considered two categories for the working sector: number 1 for the respondents in the private sector and number two for those in the public and governmental sectors. We asked our respondents to rank their adherence to their religion (religiosity) from 1 to 7: Number 1 means our respondents are non-religious, and number 7 means they are religious. We also asked our respondents to rank their welfare from 1 to 7: Number 1 means our respondents have low income, and number 7 means they have a high income.

In the second section, we asked our respondents to rank their personal and professional risk aversion from 1 to 7: number 1 means the respondents are risk-averse, number 4 means they are risk-neutral, and number 7 means they are risk lovers.

In the third section, nine risky activities were presented to measure the respondents’ level of personal risk aversion. We asked our respondents to rank those activities in terms of the likelihood that they would do them from 1 to 7: number 1 means that the respondents will never perform those risky activities while number 7 suggests it is highly likely they will.

In the fourth section, to measure the respondents’ level of professional risk aversion, the following scenarios (scenarios 1 and 2) were presented, and we asked our respondents to rank their willingness to take risks from 1 to 7:

Scenario 1:

Suppose you have an accounting firm, and a transaction proposed by a corporate client will produce high fees for your firm. However, your instinct informs you that it may conceal criminal behaviour, although you have no evidence. The transaction is within the law, and your colleagues support you in going ahead with it. Do you refuse the transaction (1) or proceed with it anyway (7)?

Scenario 2:

Suppose you need to recruit a new staff member for your firm. You interview several candidates, and one of them is particularly impressive regarding his technical skills. You decide to offer him the job, but in a later private conversation, he discloses that he involuntarily left his previous firm (he was dismissed) because of an allegation of fraud which was never investigated or proven. Do you reject him and take the second candidate, despite being of lesser capability (1), or appoint him (7)?

Finally, in the fifth section, we presented two other scenarios (scenarios 3 and 4) to test the importance of personal risk and professional risk for the respondents when there is a trade-off between those risks: number 1 (number 7) means personal risk (professional risk) is more important.

Scenario 3:

You are due to attend a critical function to meet potential new clients. You have been informed that several of the guests who will be present have recently arrived from a country that has a high COVID-19 infection rate, but you have been assured by colleagues that ”everything will be fine”. Are you highly likely to attend (7), or not at all (1), or would you be ambivalent (4)?

Scenario 4:

Suppose you have an accounting firm, and a potential new client is about to visit you in your office. He has informed you that he will quarantine himself after the meeting because he has recently arrived from a country with a high COVID-19 infection rate. He explains that he wants to see you before isolating himself in a hotel for the next ten days. He represents a multinational corporation which would be a significant source of fees for your firm if it becomes a client. Do you ask him not to visit you in your office and that this can wait until he finishes his quarantine (1), or do you go ahead with the meeting anyway (7)?

4. Findings and Results

Summary statistics of demographic variables are presented in

Table 2. The summary statistics of demographic variables.

Panel A: Frequency and Percentage of Nominal Scale Variables
	Gender				Job		Working Sector
	Freq		Percent		Freq	Percent	Freq	Percent
Category 1	159		32.6		243	49.9	303	62.2
Category 2	328		67.4		208	42.7	184	37.8
Category 3					36	7.4
	487		100		487	100	487	100
Panel B: Main Statistics of Demographic Variables
Variable	N	Mean	Med	Std	SK	Kurt	Min	Max
Gender	487	1.670	2.000	0.470	−0.740	−1.450	1	2
Age	487	36.280	34.000	8.710	1.170	1.260	20	68
Work experience	465	11.810	10.000	8.730	1.220	1.180	1	46
Job	487	1.570	2.000	0.630	0.620	−0.570	1	3
Working sector	487	1.380	1.000	0.480	0.510	−1.750	1	2
Religiosity	487	4.480	5.000	1.620	−0.500	−0.390	1	7
Welfare	487	3.940	4.000	1.010	−0.500	0.640	1	7

Med is the abbreviation of Median; Std is the abbreviation of standard deviation; SK is the abbreviation of skewness, and Kurt is the abbreviation of kurtosis. Category 1 is female, accountants, and private sectors for each variable. Category 2 defines each variable as male, auditor, and public or governmental sectors. Category 3 is defined as other for the job variable.

. This table consists of two panels: Frequency and percentage of nominal scale variables—respondents’ gender, job, and working sector—are summarized in panel A, and the main statistics of demographic variables, including mean, median, standard deviation, skewness, kurtosis, minimum, and maximum are summarized in panel B.

Table 2 shows that most participants were male (67.4%) and working in the private sector (62.2%). Approximately half of the participants were accountants, and half of them were auditors. However, a few (7.4%) were working in other positions: most were accounting teachers, researchers, and lecturers. The participants ranged in age from 20 to 68 years, and their average age was 36 years old. Most of the participants had good working experience; on average, the working experience of research participants was almost 12 years. Since most Iranian people are Muslim, on average, the participants believed they were religious. Finally, most of the participants believed that they had a mediocre income.

Summary statistics of risk-related data are presented in

Table 3. The summary statistics of risk-related data.

Panel A: Main Statistics of the Participants’ Beliefs about Their Personal and Professional Risk Aversion
	N	Mean	Med	Std	SK	Kurt	Min	Max
Personal risk aversion	487	3.970	4.000	1.390	0.110	−0.430	1	1
Professional risk aversion	487	3.830	4.000	1.500	0.170	−0.690	1	1
Panel B: Main Statistics of the Participants’ Willingness to Perform Nine Risky Activities
	N	Mean	Med	Std	SK	Kurt	Min	Max
Eating food four days past its eat-by date that appears to be still safe.	487	1.910	1.000	1.390	1.740	2.360	1	7
Walking across a meadow in which there are cattle, including a bull.	487	2.120	2.000	1.380	1.320	1.080	1	7
Participating in extreme sports such as rock climbing, parachute jumping, and wildwater rafting.	487	2.010	1.000	1.370	1.560	2.270	1	7
Agreeing to be a “Guinea pig” to test a new drug to combat a serious disease.	487	1.780	1.000	1.330	1.960	3.290	1	7
Taking up a new job and career which is entirely different from the one in which you have previously worked	487	3.390	3.000	1.740	0.590	−0.490	1	7
Going camping in the wild.	487	2.410	2.000	1.620	1.230	0.780	1	7
Ignoring some persistent physical pain by not going to the doctor.	487	3.040	3.000	1.690	0.670	−0.390	1	7
Speaking your mind about an unpopular issue on a social occasion.	487	3.120	3.000	1.630	0.650	−0.340	1	7
Openly disagreeing with your boss in front of your coworkers.	487	3.080	3.000	1.650	0.680	−0.410	1	7
Panel C: Main Statistics of the Participants’ Reaction to Two Risky Scenarios
	N	Mean	Med	Std	SK	Kurt	Min	Max
Scenario 1	487	4.310	4.000	1.900	−0.200	−1.070	1	7
Scenario 2	487	4.300	4.000	1.910	−0.270	−1.010	1	7
Panel D: Main Statistics of the Participants’ Trade-off Between Personal and Professional Risks
	N	Mean	Med	Std	SK	Kurt	Min	Max
Scenario 3	487	3.940	4.000	2.040	−0.050	−1.300	1	7
Scenario 4	487	3.680	4.000	2.120	0.130	−1.350	1	7

Med is the abbreviation of Median; Std is the abbreviation of standard deviation; SK is the abbreviation of skewness, and Kurt is the abbreviation of kurtosis.

. This table consists of four panels: The main statistics of participants’ beliefs about their personal and professional risk aversion are summarized in Panel A; the main statistics of participants’ willingness to perform nine risky activities are summarized in Panel B; in Panel C, the main statistics of participants’ reactions to two risky scenarios (scenarios 1 and 2) are presented; and finally, Panel D shows the main statistics of participants’ trade-off between personal and professional risks (scenarios 3 and 4).

Panel A shows that, on average, the participants believe they are personally and professionally risk-averse. Although the median indicates them to be risk-neutral, the positive skewness shows most participants are risk-averse. In Panel B, it is evidenced that, on average, the research participants are not willing to perform risky activities and are personally risk-averse. The mean and median of participants’ responses to all nine activities are less than 4. Panel C unexpectedly shows that, on average, the research participants are professional risk lovers. The responses to scenarios 1 and 2 indicate that Iranian accounting professionals are ready to take risks to improve their businesses. Finally, consistent with Panels B and C, Panel D shows that personal risk is more important than professional risk for the research participants.

Subsequently, the following seven hypotheses were tested.

H1: 

Iranian accounting professionals believe that they are personally risk-averse.

H2: 

Iranian accounting professionals believe that they are professionally risk-averse.

H3: 

Iranian accounting professionals in practice are personally risk-averse.

H4: 

Iranian accounting professionals in practice are professionally risk-averse.

H5: 

There is a gap between Iranian accounting professionals’ expected personal risk aversion and real personal risk aversion.

H6: 

There is a gap between Iranian accounting professionals’ expected professional risk aversion and their real professional risk aversion.

H7: 

For Iranian accounting professionals, personal risk is more important than professional risk.

Table 4. The research hypotheses test results.

Hypotheses	Null Hypothesis	Type of Test	Test Value	p Value	Result
H1	${\mu }_{PERT}\ge 4$	z-test	−0.411	0.340	The null hypothesis is not rejected
H2	${\mu }_{PORT}\ge 4$	z-test	−2.172	0.014	The null hypothesis is rejected
H3	${\mu }_{PERP}\ge 4$	z-test	−29.43	0.000	The null hypothesis is rejected
H4	${\mu }_{PORP}\le 4$	z-test	4.105	0.000	The null hypothesis is rejected
H5	${\mu }_{PERT}={\mu }_{PERP}$	z-test	12.41	0.000	The null hypothesis is rejected
H6	${\mu }_{PORT}={\mu }_{PORP}$	z-test	−4.426	0.000	The null hypothesis is rejected
H7	${\mu }_{PVP}\ge 4$	z-test	−2.104	0.017	The null hypothesis is rejected

PERT stands for the participants’ thoughts about their personal risk aversion; PORT stands for the participants’ thoughts about their professional risk aversion; PERP stands for the participants’ personal risk aversion in practice; PORP stands for the participants’ professional risk aversion in practice, and PVP stands for personal risk versus professional risk.

shows that only Hypotheses 1 and 4 are rejected from the seven research hypotheses. Iranian accounting professionals think they are not personally risk-averse but professionally risk-averse. Nevertheless, in reality, the opposite is true. They are willing to avoid risks in their personal life and take risks in their professional life. Therefore, there is a gap between Iranian accounting professionals’ thoughts about their personal and professional risk aversion and their personal and professional risk aversion in practice. Finally, Iranian accounting professionals believe that personal risk is more important than professional risk. When they face a dilemma where one is a personal risk, and the other is a professional risk, they tend to avoid personal risk rather than professional risk. This means Iranian regulators should establish or amend rules and regulations that threaten guilty accounting professionals’ personal lives, not their professional ones. In Iran, special punishments for accounting professionals include dismissal and cancellation of their certificate. Therefore, we can claim that punishments for guilty accounting professionals in Iran are insufficient to prevent them from committing fraud and other wrongdoings. It is recommended that Iranian regulators and standard-setters highlight the personal risks of accounting professionals by amending related rules and regulations.

In

Table 5. Variables influencing Iranian accounting professionals’ risk aversion.

The Path of Relationships	Coefficient	Std. Error	T-Statistic	Prob.
Age → Personal risk aversion	0.042	0.112	1.316	0.752
Age → Professional risk aversion	−0.007	0.129	0.058	0.954
Gender → Personal risk aversion	0.140	0.048	2.818	0.005 **
Gender → Professional risk aversion	0.125	0.052	2.369	0.018 *
Job → Personal risk aversion	−0.011	0.049	0.274	0.784
Job → Professional risk aversion	−0.007	0.051	0.091	0.928
Personal risk aversion → Professional risk aversion	0.160	0.048	3.269	0.001 **
Religiosity → Personal risk aversion	−0.142	0.048	2.887	0.004 **
Religiosity → Professional risk aversion	−0.072	0.053	1.372	0.171
Sector → Personal risk aversion	−0.003	0.055	0.099	0.921
Sector → Professional risk aversion	−0.067	0.051	1.344	0.180
Welfare → Personal risk aversion	0.207	0.043	4.626	0.000 **
Welfare → Professional risk aversion	0.003	0.051	0.056	0.956
Work experience → Personal risk aversion	−0.183	0.11	1.592	0.112
Work experience → Professional risk aversion	−0.064	0.131	0.481	0.631

* significant at 5%. ** significant at 1%.

, variables influencing Iranian accounting professionals’ risk aversion, illustrated in Figure 1, are tested.

The results of the structural equation analysis show no significant relationships between the research participants’ ages and their personal and professional risk aversion. Although this result is the opposite of that produced by many kinds of research, such as Gärtner et al. [71], Bonsang and Dohmen [72] and Defoe et al. [56], it is consistent with researchers such as Cahlíková and Cingl [73], and Booth and Katic [74]. Consistent with Charness and Gneezy [55], there are significant relationships between gender and personal and professional risk aversion. This means that male accounting professionals in Iran are willing to risk more than females in their personal and professional lives. Therefore, gender diversification in organizations can reduce the probability of misconduct, particularly in Iran, where most accountants and auditors are male and have an attitude of taking risks.

Furthermore, there is no significant difference between Iranian accountants’ and auditors’ risk aversion. Unlike the findings of Bellante and Link [67], working in governmental or private sectors does not significantly affect Iranian accounting professionals’ personal and professional risk aversion; unlike Ayaita and Stürmer [61], Iranian accounting professionals’ work experience does not have a significant effect on their personal and professional risk aversion. In common with the findings of Miller and Hoffmann [75] and Maung et al. [76], religious accounting professionals in Iran are more risk-averse in their personal lives. But it is not the case in their professional lives. Additionally, in common with the findings of Hartog et al. [9] and Galliera and Rutström [41], Iranian accounting professionals with higher incomes are more willing to take risks in their personal lives than their lower-income counterparts. But we could not find a significant relationship between Iranian accounting professionals’ level of income and their professional risk aversion. Finally, we found a significant relationship between personal and professional risk aversion. It means that Iranian accounting professionals who are less risk-averse in their personal lives are willing to take more risks in their professional lives.

5. Discussion and Conclusions

Risk is considered an essential factor in decision-making. Most individuals are willing to take risks to gain extra rewards. Those who want more rewards for a specific risk are risk averters, and those who want fewer rewards are risk lovers. The decision-making process of risk averters and risk lovers is completely different, particularly for accounting professionals. Accounting professionals are often exposed to ethical dilemmas and conflicts of interest. Therefore, their risk aversion can be important for regulators and standard-setters to better regulate the accounting profession and reduce fraud and corruption caused by accounting professionals.

In Iran, when accounting professionals commit fraud or violate standards and regulations, their punishment might be changing their position, being fired, or having their professional certification revoked. Therefore, they only bear professional risks for their wrongdoings. In this research, we compared personal risk aversion and professional risk aversion of Iranian accounting professionals, and it was established that although accounting professionals think they are not personally risk-averse and are professionally risk-averse, in practice, they are willing to take risks in their professional lives and to avoid risk in their personal lives. Therefore, we can claim that the punishments for guilty accounting professionals in Iran are insufficient to prevent them from committing fraud and other wrongdoings. It is recommended that Iranian regulators and standard-setters enhance the personal risks of accounting professionals by amending related rules and regulations.

Furthermore, we found a gap between Iranian accounting professionals’ thoughts about their personal and professional risk aversion and their personal and professional risk aversion in practice. We also found that when Iranian accounting professionals simultaneously face personal and professional risks, they are willing to avoid personal risk instead of professional risk.

Finally, accounting professionals’ gender, religiosity, and welfare significantly affect their personal risk aversion. In addition, their gender and personal risk aversion have a significant effect on their professional risk aversion. We did not find evidence for the existence of a relationship between Iranian accounting professionals’ age, job, working experience, and working sector and their personal and professional risk aversion.