Banks' Financial Disclosure Practices in a Cultural Context

Abstract

This paper suggests that cultural values represent one of the most important factors that determine banks' financial disclosure practices across 67 countries around the world. Cultural values are represented by the Hofstede (1980) and the Schwartz (1999) cultural models. Empirical results show that cultural values have a significant impact in this context. Individuality and Power distance cultural values (Hofstede, 1980) are important determinants of banks' disclosure practices across countries at the 0.01 confidence level. Individuality has a significant positive relationship with banks' disclosure on the: composite index, loans, other funding and memo lines. While, power distance has a significant negative relationship with memo lines. Furthermore, Schwartz (1999) cultural value dimensions show significant relationships with banks' disclosure indices across countries at the 0.01 confidence level. Intellectual autonomy, Egalitrarian, Embeddeness, and Affilitated autonomy cultural values have positive relationships with banks' disclosure on the: composite index, loans, other funds, and memo lines respectively. These results provide more understanding of banks' disclosure practices and help efforts towards harmonization of the Accounting Standards across countries.

Keywords: Bank disclosure, Cultural values, Accounting standards

JEL Classification: G21, G32, G28