Artificial Intelligence Controls and Earnings Management Intention: The Mediating Role of Ethical Decision-Making

Abstract

Artificial intelligence is receiving increasing attention in accounting, auditing, and financial reporting due to its capacity to enhance automation, processing speed, analytical efficiency, and reporting support systems. However, the growing integration of artificial intelligence into accounting practices has also generated substantial concerns regarding transparency, accountability, human oversight, and ethical responsibility. The study adopts a quantitative research design and utilizes structured data collected from 250 observations. The analysis was conducted using descriptive statistics, reliability analysis, Pearson correlation analysis, multiple linear regression, and mediation analysis. The findings reveal that artificial intelligence governance controls significantly strengthen ethical decision-making while simultaneously reducing earnings management intention. Ethical decision-making also demonstrates a significant negative association with earnings management intention, indicating that stronger ethical judgment discourages manipulative financial reporting behavior. Furthermore, the mediation analysis confirms that ethical decision-making partially mediates the relationship between artificial intelligence governance controls and earnings management intention. This explains that effective governance mechanisms reduce manipulative reporting tendencies both directly and indirectly through the promotion of ethical reasoning and professional judgment. The findings emphasize that the role of artificial intelligence in accounting should not be evaluated solely from the perspective of technological efficiency, but also through the quality of governance structures and their ethical implications. The study also offers practical implications for organizations, regulators, and accounting professionals by highlighting the importance of transparent, accountable, and ethically grounded governance systems in the successful implementation of artificial intelligence within financial reporting practices.

Keywords:  Artificial Intelligence, Ethical Decision-Making, Earnings Management