CULTURAL-INFLUENCE ON THE DEVELOPMENT OF ACCOUNTING SYSTEMS INTERNATIONALLY - A TEST OF GRAY [1988] THEORY

This paper attempts to test the theory developed by Gray [1988] linking accounting values and systems with Hofstede's [1980] cultural constructs, Based on data from twenty-nine countries, it finds that while Gray's [1988] model has statistically significant explanatory power, it is best at explaining actual financial reporting practices and is relatively weak in explaining extant professional and regulatory structures from a cultural base, This paper further finds that both the development of financial markets and levels of taxation enhance the explanations offered by Gray [1988].