The Accounting Implication of Cultural Dimensions on Financial Reporting: A Study of Selected Manufacturing Companies in Nigeria

Abstract

This study extends the literature on the impact of cultural dimensions on financial reporting practice and disclosure patterns of selected manufacturing companies in Nigeria by investigating the extent to which cultural dimensions (i.e. power distance, uncertainty avoidance, individualism and masculinity) influences financial reporting (mirrored by professionalism, uniformity, conservatism and secrecy). These cultural dimensions have served as a basis for a number of risks of material misstatements in the financial reporting process and an impediment to reducing differences in financial reporting rules that exist across countries. The study adopted a survey research design and data were collected by the use of questionnaires and analyzed using the ordinary least square (OLS) method. The results from the test of hypotheses revealed that financial reporting is significantly influenced by cultural dimensions. Finally, the study recommended that since accounting practice and financial reporting to a large extent is a product of its environment, there should be a direct link between cultural dimensions and financial reporting as it is potentially useful for users of accounting information because this provides them with supplementary information on the likelihood of material errors in financial statements. [PUBLICATION ABSTRACT]