Accounting

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Accounting Culture

• International Differences

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Manifestations of Culture

• Symbols

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Manifestations of Culture

• Symbols
• Heroes

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Manifestations of Culture

• Symbols
• Heroes
• Rituals

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Manifestations of Culture

• Symbols
• Heroes
• Rituals
• Values

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An Early Cultural Model
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An Early Cultural Model
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An Early Cultural Model
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Individualism ? Collectivism

• This dimension relates to the degree of
  integration a society maintains among its members
  or the relationship between and individual and
  his or her fellow

Collectivism Preference for a tightly-knit social
framework in which individuals can expect their
relatives or other in-group to look after them in
exchange for unquestioning loyalty.
Individualism Preference for a loosely-knit
social framework. Individuals are expected to
take care of themselves and their immediate
families only.
10
Power Distance

• This dimension relates to the extent to which the
  members of a society accept that power in
  institutions and organizations is distributed
  unequally.

Large Power Distance People tend to accept a
hierarchical order in which everybody has a place
which needs no further justification.
Small Power Distance People tend to strive for
power equalization and demand justification for
the power inequalities that do exist.
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Uncertainty Avoidance

• This dimension relates to the degree to which the
  members of society feel uncomfortable with
  uncertainty and ambiguity. The fundamental issue
  is how a society reacts to the fact that the
  future is unknown.

Strong People feel anxious about future and
create institutions to add security and avoid
risk. Associated with formal and informal rules
to guide behavior.
Weak People feel relatively secure and do not try
to control future through laws. More tolerance
for deviant ideas and behavior and willingness to
take risks.
12
Masculine ? Feminine

• This dimension relates to the division of the
  roles between sexes in society.

Masculine Societal preference for showing off,
achievement, heroism, assertiveness, making
money, thinking big, etc. Competitiveness.
Concern for equity rather than equality.
Feminine Societal preference for putting
relationships with people before money, helping
others, caring for the weaker, the quality of
life, preservation of the environment, small is
beautiful and so on.
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Accounting Values

• Professionalism
• Uniformity vs. Flexibility
• Conservatism
• Secrecy vs. Transparency

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Relationship of Culture to Accounting Values

• Hypothesis High individualism, low uncertainty
  avoidance, and low power distance is associated
  with professionalism.
• Hypothesis High uncertainty avoidance, high
  power distance, and low individualism is
  associated with preference for uniformity.

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Relationship of Culture to Accounting Values

• Hypothesis High uncertainty avoidance, low
  individualism, and low masculinity is associated
  with preference for conservatism.
• Hypothesis High uncertainty avoidance, high
  power distance, low individualism, and low
  masculinity is associated with a preference for
  secrecy.

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Standard Setting Culture

• Hypothesis The particular standard-setting
  process in each country is a function of the
  economic, political, and social environment,
  i.e., the countrys culture and traditions.
• Bloom, Robert and M. A. Naciri. 1989.
  Accounting Standard Setting and Culture A
  Comparative Analysis of the United States,
  Canada, England, Germany, Australia, New Zealand,
  Sweden, Japan, and Switzerland, The
  International Journal of Accounting Education and
  Research 24 (1) 70-97.

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Dimensions

• Extent to which standards are mandated by law
• Whether a conceptual framework is used
• Extent to which standard setters are independent
  of accounting profession
• Whether the standard setting process is open or
  secret
• Whether exposure drafts and discussion memoranda
  are circulated
• Whether public hearings are held
• How decisions are made (e.g., simple majority,
  two-thirds in favor, consensus, etc.)
• Whether external tasks forces are used and
  whether research is conducted

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Viability of Standard Setting Agencies

• Viability ability to cope successfully with the
  environment.
• Stability is a function of resources and
  structure
• More resources available ? More stable
• Diffused structure vs. Compact structure
• Compact (centralized) structure tends to be more
  stable
• Plasticity
• To be more plastic means that there are more
  possible combinations or ways to respond to
  environmental change.
• Being independent of special interests indicates
  more plasticity.
• Having mechanisms to deal with the changing
  environment is another indication of plasticity.

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Table 1 from a 1994 article
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Accounting Interaction of Social Organizing
Principles
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(No Transcript)
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Modes of Regulation

• Liberalism
• Legalism
• Associationism
• Corporatism

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Modes of Regulation