Accounting in the shadows of tradition: the role of national culture
ISSN: 0025-1747
Article publication date: 12 February 2024
Issue publication date: 16 April 2024
Abstract
Purpose
Current research aims to investigate the relationships between Chinese national cultural values (uncertainty avoidance (UA), power distance, masculinity (MAS), individualism (IDV) and Confucian dynamism) and accounting practices (professionalism, uniformity, conservatism and secrecy).
Design/methodology/approach
A sample of 842 users/preparers of financial statements participated in this cross-sectional, questionnaire-based survey from China. Covariance-based structural equation modeling (CB-SEM) was used to test the proposed relationship.
Findings
Results show that cultural values strongly impact financial reporting practices in China. Chinese society is characterized by low UA, high power distance, collectivism, future orientation (Confucianism) and masculine traits. These values show an overall preference for uniformity, conservatism and secrecy in financial reporting with weak professionalism. The findings show that Chinese society emphasizes law abidance, strict codes of conduct, written rules and regulations and respect for consistent orthodox measures.
Practical implications
This study provides valuable input for policymakers in developing regulations and accounting standards in the Chinese market. Understanding the relationship between cultural dimensions and accounting values helps to address societal challenges and align policies with cultural values to acquire desired financial reporting values. Global firm managers must consider cultural dimensions in accounting when entering Chinese markets or negotiating with partners from different cultures. Findings also suggest local managers gain self-awareness of their cultural biases and accounting values, enabling them to navigate businesses and society's financial reporting needs.
Originality/value
This study enriches the existing literature on cultural and accounting practice studies by validating the role of stakeholder and social contract theories in Gray–Hofstede’s framework and highlighting the influence of dominant cultural values on accounting values. The study provides a unique empirical analysis of the Chinese market by using a questionnaire survey and structural equation modeling (SEM). Further, it also opens avenues for future research on the relationship between cultural dimensions, accounting practices and their global impact. These findings emphasize the importance of cultural sensitivity and adaptability, especially in multicultural environments.
Keywords
Acknowledgements
We are grateful to the editor in chief, Professor Brandon Randolph-Seng and anonymous referee for their significant suggestions in improving the quality of our manuscript. We are also thankful to the anonymous survey participants. All remaining errors are our own.
Citation
Zahid, R.M.A., Khan, M.K. and Demir, V. (2024), "Accounting in the shadows of tradition: the role of national culture", Management Decision, Vol. 62 No. 3, pp. 1060-1083. https://doi.org/10.1108/MD-12-2022-1748
Publisher
:Emerald Publishing Limited
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