Journal of Behavioral and Experimental Finance, Jun 1, 2021
Abstract International Financial Reporting Standards (IFRS) have been developed in an attempt to ... more Abstract International Financial Reporting Standards (IFRS) have been developed in an attempt to minimize the differences in accounting practices across countries. These standards are developed in English and translated into other local languages. However, if professionals attach different meanings in interpreting key accounting concepts based on the language used, then comparability and consistency of their judgments will be compromised. We contribute to the behavioral finance literature by examining whether experienced professionals attach consistent or different connotative meanings to one of the key IFRS concepts, namely, ‘fair value’. Our findings show a consistent pattern of differences in professionals’ judgments on ‘fair values’ in English and its German translation. Awareness of a foreign-language effect will help professionals, firms, and standard setters to develop communication and language strategies and policies.
We examine the moderating effect of auditors' perceived social influence pressure on the infl... more We examine the moderating effect of auditors' perceived social influence pressure on the influence of partners' known preferences on auditors' sceptical judgements in China. We invoke social influence theory to provide complementary insights into the driving forces behind auditors' judgements, over and above the pressure arising from accountability. We hypothesise that the influence of partners' known preferences on auditors' sceptical judgements is stronger for auditors who perceive higher social influence pressure than those who perceive lower pressure. Our results support the hypothesis and establish the value of understanding auditors' perceived social influence pressure in managing partners' communication with audit teams.
ABSTRACT The objective of this paper is to provide theoretical and methodological suggestions to ... more ABSTRACT The objective of this paper is to provide theoretical and methodological suggestions to guide future research on the controversial topics of accountants' professional judgments and earnings management. Based on an evaluation of prior research, this paper provides four suggestions. First, it is suggested that a focus on the influence of personality variables is likely to provide sharper insights into judgments of individuals. Two relevant personality variables have been selected for this paper, namely, Construal of Self and Regulatory Focus Theory. Both Construal of Self and Regulatory Focus Theory have been, primarily in psychology literature, proven as valid and relevant for judgments, decisions and behavior. Second, prior literature conducted studies on earnings management and ethical issues to a large extent in the United States, often assuming that findings are generalizable and transferable to other countries. Given the importance of contextual factors and of gaining insights from global perspectives, the examination of nations with different contextual environments and particularly of countries in which ethical issues have not been rigorously examined, is suggested. Third, prior research has largely relied on simplistic unidimensional ethics measures that are unlikely to capture the complexity of accountants' professional judgments. It is suggested that a combination of a unidimensional measure and ‘Multidimensional Ethics Measure’ (MEM) provides richer insights into judgments. Fourth, this paper also suggests measuring “holier-than-thou” perception bias. “Holier-than-thou” perception bias means that individuals consider themselves as more ethical than their peers. This bias is important because it may foster an unethical organizational culture. Some of the suggestions included in this paper may provide useful guidance for future studies examining accountants' professional judgments and earnings management.
International Journal of Accounting, Auditing and Performance Evaluation, 2004
... accounting research by showing that judgments in accounting are not neutral and value free, a... more ... accounting research by showing that judgments in accounting are not neutral and value free, and that ... This is called 'social desirability response bias' and cannot be ignored in cross-cultural ... nature of cultural values, there is a need to discuss various economic, political and socio ...
ABSTRACT The objective of this paper is to provide theoretical and methodological suggestions to ... more ABSTRACT The objective of this paper is to provide theoretical and methodological suggestions to guide future research on the controversial topics of accountants' professional judgments and earnings management. Based on an evaluation of prior research, this paper provides four suggestions. First, it is suggested that a focus on the influence of personality variables is likely to provide sharper insights into judgments of individuals. Two relevant personality variables have been selected for this paper, namely, Construal of Self and Regulatory Focus Theory. Both Construal of Self and Regulatory Focus Theory have been, primarily in psychology literature, proven as valid and relevant for judgments, decisions and behavior. Second, prior literature conducted studies on earnings management and ethical issues to a large extent in the United States, often assuming that findings are generalizable and transferable to other countries. Given the importance of contextual factors and of gaining insights from global perspectives, the examination of nations with different contextual environments and particularly of countries in which ethical issues have not been rigorously examined, is suggested. Third, prior research has largely relied on simplistic unidimensional ethics measures that are unlikely to capture the complexity of accountants' professional judgments. It is suggested that a combination of a unidimensional measure and ‘Multidimensional Ethics Measure’ (MEM) provides richer insights into judgments. Fourth, this paper also suggests measuring “holier-than-thou” perception bias. “Holier-than-thou” perception bias means that individuals consider themselves as more ethical than their peers. This bias is important because it may foster an unethical organizational culture. Some of the suggestions included in this paper may provide useful guidance for future studies examining accountants' professional judgments and earnings management.
Countries adopting International Financial Reporting Standards (IFRS) need to educate and train t... more Countries adopting International Financial Reporting Standards (IFRS) need to educate and train their professional accountants so that they are able to interpret and apply IFRS in a consistent manner. This study examines the effect of national culture and education on the judgments of Australian (Anglo-Celtic) and Chinese final year undergraduate accounting students in Australia. It seeks to understand whether culture influences student interpretation and application of uncertainty expressions, which are used as recognition and disclosure thresholds in IFRS. Results obtained on the cultural dimensions of Uncertainty Avoidance, Individualism, Power Distance, Masculinity and Long-Term Orientation provide evidence that Chinese students exhibit greater conservatism and secrecy compared to Australian students. The results of the study indicate that national culture has a significant effect on the judgments of accounting students when interpreting and applying selected IFRS containing uncertainty expressions. The results also imply that educational similarity does not moderate the effect of culture in influencing the judgments of accounting students. An important implication of the study is that regulators and standard-setters involved in the international convergence of accounting standards need to pay greater attention to cultural factors that may result in a difference in the interpretation and application of IFRS.
Convergence of accounting standards in the context of the European Union is defined by the Europe... more Convergence of accounting standards in the context of the European Union is defined by the European Parliament as the application of a single set of high quality international accounting standards for all listed companies in order to contribute to a better functioning of the internal market. Accordingly, all listed companies in the European Union are required to apply International Financial Reporting Standards (IFRS) in their consolidated financial statements from 1 January 2005. However, differences in the legal and political systems, sources of financial capital, economic systems, and cultural features in different European Union countries are likely to cause issues that need further investigation. The main objective of this paper is to show that accounting as the language of business is embedded in a country’s social, political, and economic environment; and is not neutral and value free so that it can be transported (or imposed) across countries without regard for their accounting environments. This study critically examines the issues related to the implementation of IFRS in Germany focusing on the country’s accounting ecology. The findings of this study would particularly benefit international accounting researchers, professionals and accounting standard setting bodies interested in the convergence process.19 page(s
International management accounting research has largely examined the use of accounting informati... more International management accounting research has largely examined the use of accounting information in relation to decision-making strategies of top managers by focusing on evidence in the Anglo-American contexts. However, very little rigorous research has been conducted in other countries, which may have different historical, political, economic and social contexts largely because of the assumption that these Anglo-American strategies and practices are equally applicable and relevant in other countries. Rejecting these simplistic assumptions, this study examines the role of accounting information in a German cooperative and examines the political and economic aspects of decision-making by top managers. The objective is to show how the board of directors and senior managers use accounting information as part of their decision-making strategies and importantly how this use of accounting information is influenced by Germany's unique political, cultural, economic, social, legal and historical environment. This case study applies institutional theory in order to analyse the impact and influence of the broader institutional environment on accounting and its role in decision-making. Indeed, this case study of a German dairy cooperative, provides evidence of the uniqueness of decision-making strategies in Germany and identifies the integration of accounting and specific strategic objectives in the decision-making process. The findings indicate a greater focus on understanding important contextual influences than a dependency on narrowly defined technical aspects of accounting information. Additionally, strategies, long-term orientation and greater focus on participation are of particular importance. Moreover, decisions are based to a greater extent on both quantitative and qualitative data, which are evaluated in relation to the broader environment. In light of the ongoing globalisation process, the awareness of differences in decision-making processes will contribute to a better understanding of the role of management accounting in the globalising world. This research has significant implications for the international application of management accounting procedures and practices in decision-making processes. Multinational enterprises, governments and researcher would benefit from such insights into the utilisation of accounting information in various national contexts.
Emerald Group Publishing Limited eBooks, Mar 1, 2012
International harmonization of accounting standards and the move toward convergence have revived ... more International harmonization of accounting standards and the move toward convergence have revived an increasing interest in the influence of culture in accounting and auditing. The growing number of countries adopting IFRS and the increasing acceptance of International Standards on Auditing (ISA) has further raised researchers’ attention. For example, more than 100 countries require or permit the use of IFRS, with more countries, such as Canada, India, and Korea, planning to adopt IFRS by 2011 (Deloitte Touche Tohmatsu, 2007; IASB, 2007a, 2007b). This move toward convergence is driven largely on assumptions and assertions based on enhancing international comparability of accounting and auditing information.
Journal of Behavioral and Experimental Finance, Jun 1, 2021
Abstract International Financial Reporting Standards (IFRS) have been developed in an attempt to ... more Abstract International Financial Reporting Standards (IFRS) have been developed in an attempt to minimize the differences in accounting practices across countries. These standards are developed in English and translated into other local languages. However, if professionals attach different meanings in interpreting key accounting concepts based on the language used, then comparability and consistency of their judgments will be compromised. We contribute to the behavioral finance literature by examining whether experienced professionals attach consistent or different connotative meanings to one of the key IFRS concepts, namely, ‘fair value’. Our findings show a consistent pattern of differences in professionals’ judgments on ‘fair values’ in English and its German translation. Awareness of a foreign-language effect will help professionals, firms, and standard setters to develop communication and language strategies and policies.
We examine the moderating effect of auditors' perceived social influence pressure on the infl... more We examine the moderating effect of auditors' perceived social influence pressure on the influence of partners' known preferences on auditors' sceptical judgements in China. We invoke social influence theory to provide complementary insights into the driving forces behind auditors' judgements, over and above the pressure arising from accountability. We hypothesise that the influence of partners' known preferences on auditors' sceptical judgements is stronger for auditors who perceive higher social influence pressure than those who perceive lower pressure. Our results support the hypothesis and establish the value of understanding auditors' perceived social influence pressure in managing partners' communication with audit teams.
ABSTRACT The objective of this paper is to provide theoretical and methodological suggestions to ... more ABSTRACT The objective of this paper is to provide theoretical and methodological suggestions to guide future research on the controversial topics of accountants' professional judgments and earnings management. Based on an evaluation of prior research, this paper provides four suggestions. First, it is suggested that a focus on the influence of personality variables is likely to provide sharper insights into judgments of individuals. Two relevant personality variables have been selected for this paper, namely, Construal of Self and Regulatory Focus Theory. Both Construal of Self and Regulatory Focus Theory have been, primarily in psychology literature, proven as valid and relevant for judgments, decisions and behavior. Second, prior literature conducted studies on earnings management and ethical issues to a large extent in the United States, often assuming that findings are generalizable and transferable to other countries. Given the importance of contextual factors and of gaining insights from global perspectives, the examination of nations with different contextual environments and particularly of countries in which ethical issues have not been rigorously examined, is suggested. Third, prior research has largely relied on simplistic unidimensional ethics measures that are unlikely to capture the complexity of accountants' professional judgments. It is suggested that a combination of a unidimensional measure and ‘Multidimensional Ethics Measure’ (MEM) provides richer insights into judgments. Fourth, this paper also suggests measuring “holier-than-thou” perception bias. “Holier-than-thou” perception bias means that individuals consider themselves as more ethical than their peers. This bias is important because it may foster an unethical organizational culture. Some of the suggestions included in this paper may provide useful guidance for future studies examining accountants' professional judgments and earnings management.
International Journal of Accounting, Auditing and Performance Evaluation, 2004
... accounting research by showing that judgments in accounting are not neutral and value free, a... more ... accounting research by showing that judgments in accounting are not neutral and value free, and that ... This is called 'social desirability response bias' and cannot be ignored in cross-cultural ... nature of cultural values, there is a need to discuss various economic, political and socio ...
ABSTRACT The objective of this paper is to provide theoretical and methodological suggestions to ... more ABSTRACT The objective of this paper is to provide theoretical and methodological suggestions to guide future research on the controversial topics of accountants' professional judgments and earnings management. Based on an evaluation of prior research, this paper provides four suggestions. First, it is suggested that a focus on the influence of personality variables is likely to provide sharper insights into judgments of individuals. Two relevant personality variables have been selected for this paper, namely, Construal of Self and Regulatory Focus Theory. Both Construal of Self and Regulatory Focus Theory have been, primarily in psychology literature, proven as valid and relevant for judgments, decisions and behavior. Second, prior literature conducted studies on earnings management and ethical issues to a large extent in the United States, often assuming that findings are generalizable and transferable to other countries. Given the importance of contextual factors and of gaining insights from global perspectives, the examination of nations with different contextual environments and particularly of countries in which ethical issues have not been rigorously examined, is suggested. Third, prior research has largely relied on simplistic unidimensional ethics measures that are unlikely to capture the complexity of accountants' professional judgments. It is suggested that a combination of a unidimensional measure and ‘Multidimensional Ethics Measure’ (MEM) provides richer insights into judgments. Fourth, this paper also suggests measuring “holier-than-thou” perception bias. “Holier-than-thou” perception bias means that individuals consider themselves as more ethical than their peers. This bias is important because it may foster an unethical organizational culture. Some of the suggestions included in this paper may provide useful guidance for future studies examining accountants' professional judgments and earnings management.
Countries adopting International Financial Reporting Standards (IFRS) need to educate and train t... more Countries adopting International Financial Reporting Standards (IFRS) need to educate and train their professional accountants so that they are able to interpret and apply IFRS in a consistent manner. This study examines the effect of national culture and education on the judgments of Australian (Anglo-Celtic) and Chinese final year undergraduate accounting students in Australia. It seeks to understand whether culture influences student interpretation and application of uncertainty expressions, which are used as recognition and disclosure thresholds in IFRS. Results obtained on the cultural dimensions of Uncertainty Avoidance, Individualism, Power Distance, Masculinity and Long-Term Orientation provide evidence that Chinese students exhibit greater conservatism and secrecy compared to Australian students. The results of the study indicate that national culture has a significant effect on the judgments of accounting students when interpreting and applying selected IFRS containing uncertainty expressions. The results also imply that educational similarity does not moderate the effect of culture in influencing the judgments of accounting students. An important implication of the study is that regulators and standard-setters involved in the international convergence of accounting standards need to pay greater attention to cultural factors that may result in a difference in the interpretation and application of IFRS.
Convergence of accounting standards in the context of the European Union is defined by the Europe... more Convergence of accounting standards in the context of the European Union is defined by the European Parliament as the application of a single set of high quality international accounting standards for all listed companies in order to contribute to a better functioning of the internal market. Accordingly, all listed companies in the European Union are required to apply International Financial Reporting Standards (IFRS) in their consolidated financial statements from 1 January 2005. However, differences in the legal and political systems, sources of financial capital, economic systems, and cultural features in different European Union countries are likely to cause issues that need further investigation. The main objective of this paper is to show that accounting as the language of business is embedded in a country’s social, political, and economic environment; and is not neutral and value free so that it can be transported (or imposed) across countries without regard for their accounting environments. This study critically examines the issues related to the implementation of IFRS in Germany focusing on the country’s accounting ecology. The findings of this study would particularly benefit international accounting researchers, professionals and accounting standard setting bodies interested in the convergence process.19 page(s
International management accounting research has largely examined the use of accounting informati... more International management accounting research has largely examined the use of accounting information in relation to decision-making strategies of top managers by focusing on evidence in the Anglo-American contexts. However, very little rigorous research has been conducted in other countries, which may have different historical, political, economic and social contexts largely because of the assumption that these Anglo-American strategies and practices are equally applicable and relevant in other countries. Rejecting these simplistic assumptions, this study examines the role of accounting information in a German cooperative and examines the political and economic aspects of decision-making by top managers. The objective is to show how the board of directors and senior managers use accounting information as part of their decision-making strategies and importantly how this use of accounting information is influenced by Germany's unique political, cultural, economic, social, legal and historical environment. This case study applies institutional theory in order to analyse the impact and influence of the broader institutional environment on accounting and its role in decision-making. Indeed, this case study of a German dairy cooperative, provides evidence of the uniqueness of decision-making strategies in Germany and identifies the integration of accounting and specific strategic objectives in the decision-making process. The findings indicate a greater focus on understanding important contextual influences than a dependency on narrowly defined technical aspects of accounting information. Additionally, strategies, long-term orientation and greater focus on participation are of particular importance. Moreover, decisions are based to a greater extent on both quantitative and qualitative data, which are evaluated in relation to the broader environment. In light of the ongoing globalisation process, the awareness of differences in decision-making processes will contribute to a better understanding of the role of management accounting in the globalising world. This research has significant implications for the international application of management accounting procedures and practices in decision-making processes. Multinational enterprises, governments and researcher would benefit from such insights into the utilisation of accounting information in various national contexts.
Emerald Group Publishing Limited eBooks, Mar 1, 2012
International harmonization of accounting standards and the move toward convergence have revived ... more International harmonization of accounting standards and the move toward convergence have revived an increasing interest in the influence of culture in accounting and auditing. The growing number of countries adopting IFRS and the increasing acceptance of International Standards on Auditing (ISA) has further raised researchers’ attention. For example, more than 100 countries require or permit the use of IFRS, with more countries, such as Canada, India, and Korea, planning to adopt IFRS by 2011 (Deloitte Touche Tohmatsu, 2007; IASB, 2007a, 2007b). This move toward convergence is driven largely on assumptions and assertions based on enhancing international comparability of accounting and auditing information.
This paper examines whether universities are delivering pedagogical value to international accoun... more This paper examines whether universities are delivering pedagogical value to international accounting students commensurate with the costs of studying abroad. The paper uses survey and interview methods to explore the extent to which Chinese Learners (CLs) in an Australian postgraduate accounting subject have distinct learning needs. The paper then reviews universities’ responses to these needs, especially in light of funding and resource pressures. The paper reinforces findings that CLs have different learning approaches to local students, but not inferior or ‘shallow’ approaches. However, since CLs face distinctive financial and social pressures to achieve high results, their learning practices may be more sensitive to changes in teaching and assessment, such that cost constraints on educational resources might disproportionately affect their learning. This suggests that a paradoxical result of the funding pressures on many universities may be to encourage large international student cohorts while constraining available resources to meet their learning needs.
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Papers by Chris Patel