Testing the “Inverted†U†Phenomenon in Moral Development on Recently Promoted Senior Managers and Partners

This paper examines the change in the average level of moral development over a 7.5†year period of promotion, attrition, and survival in five Big 6 firms. The study improves upon previous cross†sectional studies that found decreases in the average level of moral development at the senior manager and partner levels, which has been referred to as the “inverted†U†phenomenon. Problems with these studies that limit the generalizability of their findings include their cross†sectional nature and samples that usually come from one or two firms. Over a 7.5†year period, we found that the participating Big 6 firms retained auditors with higher average levels of moral development (measured using the defining issues test), while those with lower average levels left the firms. The average level of moral development for new partners was at least as high as the group from which they came. This research suggests that the concern about Big 6 firms retaining a higher proportion of auditors with lower moral development may be an artifact of research design.