The Impact of Cultural Differences on the Convergence of International Accounting Codes of Ethics

Abstract:     
The International Federation of Accountants (IFAC) has issued a revised "Code of Ethics for Professional Accountants" (IFAC Code). The IFAC Code is intended to be a model code of ethics for national accounting organizations throughout the world. Prior research demonstrates that approximately 50 percent of IFAC member organizations have adopted the IFAC Code as their organizational code of conduct. There is therefore empirical evidence that international convergence of accounting ethical standards is occurring. We employ Hofstede's (2008) cultural dimensions in an attempt to empirically explain accounting organizations' decisions about whether to adopt the IFAC Code or to retain their organization-specific code. Our results indicate that accounting organizations in cultures with high levels of Individualism and Uncertainty Avoidance are less likely to adopt the model IFAC Code. Organizations in high Individualism and Uncertainty Avoidance societies are therefore less likely to surrender the setting of ethical standards to an outside, international organization.

Number of Pages in PDF File: 22

Keywords: Accounting profession, codes of conduct, codes of ethics, cultural influences, IFAC

JEL Classification: M14, M41, M49

working papers series