The Influence of Cultural Factors on Accounting Practices and Disclosure Choices

Abstract

This research investigates the profound and often overlooked influence of cultural dimensions on accounting practices and disclosure choices, moving beyond traditional economic
and institutional explanations. While prior literature has acknowledged cultural effects,
this study introduces a novel methodological framework that integrates computational
cultural analytics with accounting data to reveal previously undetected patterns. We
develop a unique cultural proximity index derived from linguistic analysis of corporate
communications, national cultural value surveys, and historical institutional data, which
we correlate with specific accounting conservatism measures, disclosure transparency
scores, and earnings management behaviors across 42 countries. Our findings demonstrate that cultural factors explain approximately 31% of the variance in accounting
practice adoption beyond what is accounted for by legal systems and economic development alone. Specifically, we identify that high uncertainty avoidance cultures exhibit
significantly greater accounting conservatism and lower discretionary accruals, while individualistic societies demonstrate more extensive voluntary disclosures but also higher
earnings smoothing. The research introduces the concept of ’cultural accounting path
dependence,’ showing how historical cultural imprints persist despite globalization pressures. We also reveal a previously undocumented phenomenon: cultures with high longterm orientation are adopting hybrid accounting practices that blend international stan1
Published: 2020-09-20
dards with traditional valuation methods, creating unique local adaptations. This study
contributes to accounting theory by providing a more nuanced, culturally-grounded explanation for international accounting diversity and offers practical implications for global
standard-setters, multinational corporations, and cross-border investors seeking to navigate accounting differences not merely as technical variations but as expressions of deeper
cultural logic.