The Impact of National Culture on Accounting Judgement under IFRS: Experimental Evidence from Asia and Europe

• In Event: Culture and Institutional Influences

Abstract

Despite many countries adopting IFRS, or converging their domestic accounting standards with IFRS, the international comparability of financial reporting is compromised due to cultural differences that influence the judgements inherent in the application of IFRS. Using an experimental design and mediation analysis, we empirically investigate cultural differences in individual characteristics and international differences in accounting judgements associated with impairment tests. We find that materiality assessments around impairment indication and cash flow estimates for recoverable amount determination are influenced by differing risk preferences and levels of overconfidence across countries. The implication of such findings is that reducing overt- and covert-options in accounting standards could enhance international comparability of financial reports.

Authors

• Keryn Chalmers, Monash University, Caulfield Campus

• Christina Voets, Munster Universitye

• Peter Kajuter, Muenster University