Culture and accounting in Indonesia: An empirical examination

Abstract

This study examines the relationships among the cultural characteristics of Indone stan society reporting practices of Indonestan firms and accouonting standards promulgated by the Association of Indonestan Accountants. It is argued that an empirical relation exists between the change in cultural values as concerved by Hofstede's theory of the five dimensions of cultural values (power distance uncertainty avoidance individualism masculinity and time horizon and the change in accounting values as captured by Gray's four dimensions (professionalism conservatism secrecy and uniformity) Using LISREL to evaluate data between 1981 and 1992 three of Hosfstede's five cultural values (power distance uncertainty avoidance and individualism have significant relationships with one or more decounting value. This limited conformation of the culture accounting relationships suggest that particular historical and economic configurations must be considered in longitudinal analysis. The conflicting influences of existensive government involvement in the economy and nascent market competition are a possible explanation of the Indonesian results. Copyright © 1996 University of Illinois.