Influence of National Culture on Accounting Conservatism and Risk Taking in the Banking Industry

57 Pages Posted: 3 Sep 2013 Last revised: 24 Oct 2015

See all articles by Kiridaran (Giri) Kanagaretnam

Kiridaran (Giri) Kanagaretnam

York University - Schulich School of Business

Chee Yeow Lim

Singapore Management University - School of Accountancy

Gerald J. Lobo

University of Houston - C.T. Bauer College of Business

Date Written: July 1, 2013

Abstract

Using an international sample of banks and country-level indices for individualism and uncertainty avoidance as proxies for national culture, we study how differences in culture across countries affect accounting conservatism and bank risk taking. Consistent with expectations, our cross-country analysis indicates that individualism is negatively (positively) related to conservatism (risk taking) and uncertainty avoidance is positively (negatively) related to conservatism (risk taking). We also find that cultures that encourage higher risk taking experienced more bank failures and bank troubles during the recent financial crisis.

Keywords: National culture, Accounting Conservatism, Risk taking, Individualism, Uncertainty avoidance, Banking

JEL Classification: G21, G28, G34

Suggested Citation

Kanagaretnam, Kiridaran and Lim, Chee Yeow and Lobo, Gerald J., Influence of National Culture on Accounting Conservatism and Risk Taking in the Banking Industry (July 1, 2013). Accounting Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2319548 or http://dx.doi.org/10.2139/ssrn.2319548

Kiridaran Kanagaretnam (Contact Author)

York University - Schulich School of Business ( email )

4700 Keele Street
Toronto, Ontario M3J 1P3
Canada

Chee Yeow Lim

Singapore Management University - School of Accountancy ( email )

60 Stamford Road
Singapore 178900
Singapore

Gerald J. Lobo

University of Houston - C.T. Bauer College of Business ( email )

Houston, TX 77204-6021
United States
713-743-4838 (Phone)
713-743-4828 (Fax)

HOME PAGE: http://www.bauer.uh.edu/acct/acctprofile.asp?search=Gerald%20Lobo

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