Publication Type
Conference Paper
Publication Date
7-2004
Abstract
We explore the extent to which cultural conservatism explains accounting conservatism. Our primary measure for accounting conservatism is the magnitude of non-operating accruals, which are highly discretionary in nature. Culture permeates values and attitudes, and thus governs many aspects of human behavior. Hence it is likely to affect managers’ accounting choice behaviors. However, there is surprisingly little evidence on the association between the two types of conservatism in the literature. Using a sample of 800 firms originating from 21 countries during the nine-year period from 1993 to 2001, we find strong evidence that the managers in more conservative cultural environments tend to make more conservative accounting choices (e.g., report lower estimates for future cash flows). We also find some empirical support for the idea that culture and legal regime interact as substitutes in explaining accounting conservatism.
Discipline
Accounting | Sociology of Culture
Research Areas
Financial Performance Analysis
Publication
Asia Pacific Interdisciplinary Research in Accounting Conference 4th APIRA 2004, July 2-3
City or Country
Singapore
Citation
Kang, Tony; LEE, Lian Fen; NG, Jeffrey; and TAY, Joanne.
The Impact of Culture on Accounting Choices: Can Cultural Conservatism Explain Accounting Conservatism?. (2004). Asia Pacific Interdisciplinary Research in Accounting Conference 4th APIRA 2004, July 2-3.
Available at: https://ink.library.smu.edu.sg/soa_research/275
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.