The Effects of National Culture on Financial Statement Comparability: A Survey of Research Findings

Abstract

Many of those who advocate the adoption of a set of high‐quality global financial accounting standards (International Financial Reporting Standards, or IFRSs) do so on the basis of enhanced cross‐border financial statement comparability. Indeed, the notion that financial statements would be prepared on a single set of accounting standards regardless of the country of domicile of the underlying businesses certainly has its merits. However, there is a growing body of academic research providing evidence that simply adopting IFRSs, by itself, is not sufficient to result in an enduring improvement in financial reporting quality within IFRS‐adopting countries. National culture, for instance, has the potential to affect accountants' judgments in applying financial accounting standards—regardless of those standards' origin—and to impact national institutions that further influence national accounting. Here, we highlight the findings of some of the relevant research on national culture published in accounting journals in recent years and discuss some potential implications of those findings. © 2015 Wiley Periodicals, Inc.