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Ethics, of late, had aroused significant interest amongst practitioners and academics alike. The collapse of Enron, the largest energy‐trading company in the US had jolted the profession out of its complacency and serves a warning that all is not well with the profession. It is under scrutiny! The message is clear, if accountants want to be relevant, they have to be more diligent and ethical. This paper reports on an empirical research carried out to understand the impact of the implementation of the By‐Laws (On Professional Conduct and Ethics) isued by the Malaysian Institute Of Accountants to its members. We use structured interviews and questionnaires and were able to solicit resources from 92 respondents out of 110 approached. We looked at five issues – whether respondents knew the existence of the By‐Laws, how much they knew about it, how much they understood its provisions, why they follow certain principles enshrined in it and how often they refer to it when faced with conflicts which were addressed by the By‐Laws. From the study, we found that the By‐Laws have no significant influence over their actions and behavior. This was due to the fact that most of them were ignorant of the By‐Laws. As such many were unaware of the provisions contained in it. even amongst those who were aware, not many refer to it when faced with ethical dilemma. Any adherence to the provisions of the By‐Laws were either coincidental or by default due to them being a universally accepted deeds.

The paper aims to evaluate the effectiveness of ethics courses provided to Malaysian accounting students and their impact on ethical judgement‐making ability.

Third‐year accounting students from six Malaysian universities participated in a pre‐ and post‐ethics course study. The sample consisted of four universities which provide an ethics course (experiment group) and two universities which do not provide an ethics course (control group). Rest's Defining Issues Test instrument was employed and the p‐score was calculated. Univariate tests were used to compare levels of ethical judgement‐making ability.

Students who attended an ethics course improved significantly in their ethical judgement‐making ability compared to students who did not attend the course. Male students, non‐Muslim students and students in private universities benefit more from attending an ethics course compared to their female and Muslim students and those students in public universities.

The findings indicate that providing ethics courses reshapes the ethical thinking of future accountants and thus are likely to improve the local ethical climate amongst professionals in the field. Results indicate significant improvements in cognitive moral development, although many students continue to apply conventional (Stage 4) reasoning skills when dealing with issues. The research provides a positive signal to the accounting faculties indicating that their effort in inculcating ethical values is worthwhile and this endeavour has to continue.

This study involves a controlled field study of a unique group of Malaysian accounting students and applies Kohlberg's theory of moral development to demonstrate the effect of an ethics intervention. Particular attention was given to examining conventional (Stage 4) judgment‐making processes and how this appears to be influenced by religious affiliation and university type. This adds value to the ethics literature as there are only a few studies examining the merits of Stage 4 reasoning. Most importantly, it helps to fill a gap in the literature by providing both cross‐sectional and longitudinal data from multiple samples of ethics classes, using both experiment and control groups.