The Cultural Aspect of Differences in Company Performance across Countries: Gray’s Accounting Values Contribute more than Hofstede’s Original Cultural Dimensions

Finn Schoeler

doi:10.4172/2168-9601.1000287

Abstract

The Cultural Aspect of Differences in Company Performance across Countries: Gray’s Accounting Values Contribute more than Hofstede’s Original Cultural Dimensions

Highlights

Comparability of the financial information presented by companies is one of the objectives of countries’ switching from using local accounting practices to the IFRS Framework
It seems clear that no matter whether we focus on industry adjusted or industry non-adjusted performance, or whether we keep the accounting regime dummies in the model or not, the Hofstede cultural indicators as such add explanatory power, since the adjusted R2 increase
In the second and in the third section we present Akaike criterion calculations, AICC, and in the fourth section we present the ratio between these pairwise Akaike calculations based on Hofstede and Gray variables, which can be used as a selection criterion

Summary

Introduction

Comparability of the financial information presented by companies is one of the objectives of countries’ switching from using local accounting practices to the IFRS Framework. H2: The country-based level of observable financial performance ratios will be different but show same pattern as observable WEF-country performance; and introduction of four different accounting regimes, i.e. IFRS as published by IASB, IFRS as adopted by EU, IFRS allowed (as adopted locally or incomplete), and IFRS disallowed, and introduction of Hofstede’s five culture indicators, PDI, IDV, MAS, UAI, and LTO will make the relation remarkably stronger.

Results

Conclusion