The Association between National Culture Dimensions and Judgement and Decision Making in the Context of Fair Value Measurements under IFRS

Abstract

This experimental study analyzes the association between national culture dimensions and accounting JDM. Based on data from 265 accounting students from four distinct culture clusters (Anglo, Confucian, Germanic, and Latin Europe), we find that JDM differs across culture clusters, but that selected three national culture dimensions can explain the observed differences in JDM only partially. Our results suggest that caution should be exercised when attributing observable differences in accounting JDM to differences in aggregated average scores for that cluster or country as proposed in prior research. The findings also contradict the common assumption made in prior research that individuals from a specific culture share a homogeneous pattern of culture dimensions consistent with the aggregated average scores of their culture. Our findings are of interest to preparers, users, and auditors of IFRS financial statements and accounting standard-setters by increasing awareness of the interaction between cultural differences and IFRS application.

Keywords: judgement and decision making, national culture, fair value measurement, risk perceptionJudgement and decision making; national culture dimensions; fair value measurement

JEL Classification: M41