“The Effect of Culture on the Convergence or Adoption of International Financial Reporting Standards in Latin American Countries”

• In Event: Concurrent Session 1.3: Financial Reporting and Disclosures

Abstract

This study examines the effect of culture on the degree of convergence or adoption of International Financial Reporting Standards (IFRS) in Latin American countries (LAC). Past studies address issues such as differences in each country’s culture, the barriers to the adoption of IFRS and the impact of their adoption on financial reporting. Using the IFRS Adoption by Country Survey published by PricewaterhouseCoopers LLP (PwC) in September 2011, and Hofstede’s (1980, 2001) cultural dimensions we design a grading system to measure the degree of convergence or adoption in LAC. We ranked LAC based on equally and value weighted scores and used regression and correlation analyses to determine if the degree of convergence or adoption is related to Hofstede’s dimensions. Initial results suggest that a country’s individualism/collectivism seems to be the only cultural dimension that might have a significant effect on the convergence or adoption of IFRS in LAC. Since these results were obtained from a sample of LAC that do not display variation in culture, the next stage of our investigation will incorporate a sample of European countries and Asian countries to explore the study’s research question of interest more in depth.

Authors

• Rogelio J Cardona, University of Puerto Rico, Rio Piedras

• Karen Camile Castro-Gonzalez, University of Puerto Rico, Rio Piedras

• Carmen Belen Rios-Figueroa, IEN Bus. School, Universidad del Este, Carolina, PR