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Title: Corporate Governance and Accounting Practice: Culture vs. Law Dominance of Literature
Contributor(s): Farooque, Omar  (author)orcid 
Publication Date: 2011
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Abstract: Corporate governance and accounting systems/practices are dependent on the national law and culture of the country along with different economic and political compositions. Having high level of association with law of the land, cultural values evolve over time that affects the development of a nation's accounting and governance system in general. Differences in different aspects of governance and accounting issues are due to cultural differences. Although there has been a move since 2005 toward convergence of national accounting practices to IFRS and uniform governance principles and code of conduct, there is little success for the latter than the former. In the first part, this study explores the impact of cultural norms on accounting based on Gray's (1988) study and a number of studies on culture such as Hofstede (1980, 1984), Schwartz's (1994, 1999) studies and Chinese Cultural Connection (CVS) 1987 study. Here, diverse nature of relationship between accounting values and cultural values of the four studies is observed. No particular trend of relationship is found though accounting system/values are impacted by most of the cultural values with the exception of a few. In the second part, this paper examines interactive relations of a number of studies on law and culture such as Hofstede, Schwartz and CVS studies depending on firstly the legal family /country category of LLSV study and then on Schwartz study. Different statistical tests do not confirm uniformity among the legal families either in investors' rights and enforcement or cultural variables. The evidence suggests differences in laws and their enforcement among the different legal families as well as cultural similarity and dissimilarity. It is also evident from alternative analysis that cultural regions are different from each other in respect to LLSV's investors' rights and law enforcement variables as well as with the cultural variables of the three cultural studies. These findings deserve attention of the policy makers in developing country specific corporate governance system and accounting practices rather than just duplicating from other countries.
Publication Type: Conference Publication
Conference Name: 47th British Accounting and Finance Association (BAFA) Annual Conference, Birmingham, United Kingdom, 12th - 14th April, 2011
Conference Details: 47th British Accounting and Finance Association (BAFA) Annual Conference, Birmingham, United Kingdom, 12th - 14th April, 2011
Source of Publication: Presented at the 47th Annual British Accounting and Finance Association Conference
Field of Research (FOR): 150303 Corporate Governance and Stakeholder Engagement
Socio-Economic Outcome Codes: 959999 Cultural Understanding not elsewhere classified
Peer Reviewed: Yes
HERDC Category Description: E3 Extract of Scholarly Conference Publication
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