The effect of culture on accounting conservatism during adoption of IFRS in the EU
International Journal of Accounting & Information Management
ISSN: 1834-7649
Article publication date: 8 May 2018
Abstract
Purpose
This paper aims to examine the impact of culture on accounting conservatism during transition to international standards.
Design/methodology/approach
The sample used in this analysis consists of 15 countries of the European Union that have adopted International financial reporting standards (IFRS) pursuing Regulation N° 1606/2002. The study covers the 2000-2010 period. Two conservatism measures are used, the Basu (1997) measure to account for conditional conservatism and the accruals measure to account for unconditional conservatism. To test the impact of culture, the six dimensions of Hofstede (1980, 2010) are used.
Findings
The results of the analysis show that variation of conditional conservatism is influenced by the six cultural dimensions. However, unconditional conservatism is only affected by power distance.
Originality/value
The results of the study are interesting and provide a better understanding of the adoption of IFRS worldwide. The role of culture in explaining accounting practices after adopting a single set of accounting standards is particularly highlighted.
Keywords
Citation
Zeghal, D. and Lahmar, Z. (2018), "The effect of culture on accounting conservatism during adoption of IFRS in the EU", International Journal of Accounting & Information Management, Vol. 26 No. 2, pp. 311-330. https://doi.org/10.1108/IJAIM-08-2016-0077
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited