The Influence of Cultural Values on Accounting Practices

(Laila Long)

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Abstract

This paper attempts to test the theory developed by Gray (1988) and its implications developed by the researcher linking accounting values and accounting practices with Hofstede’s (1980) cultural dimensions. Based on data from 19 countries (developed and developing countries), it finds that while Gray’s model has statistically significant explanatory power. It is best in explaining (1) the authority for accounting systems; (2) their force of application; (3) the measurement practices used; and (4) the extent of information disclosed, by two main dimensions: (1) individualism / collectivism, (2) large/small power distance. It is found weak at explaining accounting practices by strong/weak uncertainty avoidance, and masculinity/femininity. Developing countries, including Arab countries, need to be aware about cultural differences when adopting international accounting standards.
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