One of the goals of international convergence is harmonization of accounting standards and increased comparability in financial reporting. However, even with convergence financial reporting differences will remain across countries. Some differences will stem from fairly obvious and observable sources, like countries’ various legal environments. Other sources of financial reporting differences, like cultural influences, are likely to be more subtle. To put it another way, even if financial reporting from disparate countries looks similar on its face, the influence of culture on the underlying preparation of the information is likely to reduce comparability.

While other fields (primarily organizational behavior) have embraced the importance of understanding how cultural differences influence such things as communication styles and trust among individuals (see, for example, Hofstede (1980)), I have not seen much research within accounting which examines how cultural differences might influence the judgment and behavior of financial statement preparers or users. One exception is a working paper by Castro, Desender and Escamilla de Leon (2009), which shows that cultures high on Hofstede’s (1980) measure of Individualism and Schwartz’s (1994) measure of Egalitarianism have significantly lower levels of earnings management. Additional research on how cultural differences influence both the behavior of managers as well as users’ perceptions of their trustworthiness could be quite interesting when evaluated in light of current standard-setting projects that increase managerial discretion.

I’m curious to hear others’ thoughts. Is there additional research out there that could shed some light on this issue? Are there other areas of interest to accounting researchers? For example, Trotman (2005) points out that the increasingly global/cross-cultural nature of audits makes it likely that culture could influence interpersonal interactions (e.g. negotiations). It may also be fruitful for researchers to explore in more detail how cultural differences have shaped countries’ economic institutions over time.