Culture - Impact on Financial Accounting Disclosure Behaviour - Empirical Evidence from Singapore and Australia
MIKKONEN, PÄIVI (2006)
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MIKKONEN, PÄIVI
2006
Yrityksen taloustiede, laskentatoimi - Accounting and Finance
Kauppa- ja hallintotieteiden tiedekunta - Faculty of Economics and Administration
Hyväksymispäivämäärä
2006-12-14Tiivistelmä
This study concentrated on the issues of financial accounting disclosure behaviour from a cultural perspective. The main objective was to find out whether held national cultural values do have an impact on disclosure behaviour. To get a justified answer, two sub-questions were made. Firstly, is there a match between accounting values and societal values, which are assumed to reflect national culture? Secondly, how these possible culture specific accounting values are presented in financial accounting disclosures?
The impact of culture is acknowledged in most international accounting studies. Its role in it has been the question mark, whether it has a direct or indirect effect on accounting. In 1960s - 1980s a Dutchman Geert Hofstede carried out a cross-cultural study about differences in national culture. He collected and analysed data from 72 countries from over 110,000 individuals to reveal structural elements of culture and especially those, which were strongly affecting known behaviour in work situations. Based on his results he formed five dimensions to explain differences in cultural behaviour. His study is known as 5D-model.
In the study I used two example countries, Australia and Singapore, and two multinational companies from both countries. I had one airline and one telecom company from both countries. Based on Hofstede’s 5D-model, I formed assumptions about country specific accounting systems and accounting values. I compared them to countries’ current accounting systems and corporate governance, which I assumed to reflect held accounting values. Based on results, I further studied companies’ disclosures to find out whether received results were present in their written information.
I found out that the culture specific values were visible despite strong industry specific values in disclosed information. A combining element was the corporate governance, which actually reflected both legal requirements and held cultural values. I concluded that cultural values indirectly affect country specific accounting systems. More importantly, cultural values seemed to affect directly both management and accounting values. That is, cultural values do have an impact on financial accounting disclosure behaviour.
Key words culture, financial accounting disclosure behaviour, accounting systems, accounting values, corporate governance
The impact of culture is acknowledged in most international accounting studies. Its role in it has been the question mark, whether it has a direct or indirect effect on accounting. In 1960s - 1980s a Dutchman Geert Hofstede carried out a cross-cultural study about differences in national culture. He collected and analysed data from 72 countries from over 110,000 individuals to reveal structural elements of culture and especially those, which were strongly affecting known behaviour in work situations. Based on his results he formed five dimensions to explain differences in cultural behaviour. His study is known as 5D-model.
In the study I used two example countries, Australia and Singapore, and two multinational companies from both countries. I had one airline and one telecom company from both countries. Based on Hofstede’s 5D-model, I formed assumptions about country specific accounting systems and accounting values. I compared them to countries’ current accounting systems and corporate governance, which I assumed to reflect held accounting values. Based on results, I further studied companies’ disclosures to find out whether received results were present in their written information.
I found out that the culture specific values were visible despite strong industry specific values in disclosed information. A combining element was the corporate governance, which actually reflected both legal requirements and held cultural values. I concluded that cultural values indirectly affect country specific accounting systems. More importantly, cultural values seemed to affect directly both management and accounting values. That is, cultural values do have an impact on financial accounting disclosure behaviour.
Key words culture, financial accounting disclosure behaviour, accounting systems, accounting values, corporate governance