Culture-based Ethical Conflicts & Multinational Accounting Firms

Cohen, J. R., L. W. Pant and D. J. Sharp. 1993. Culture-based ethical conflicts confronting multinational accounting firms. Accounting Horizons (September): 1-13.

Note by James R. Martin

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The authors integrate cross-cultural issues and ethics by using Hofstede's measures of cultural differences (see the links below). Their purpose is to identify cross-cultural problems in auditor's ethical perspectives regarding questionable client behavior. The table below provides a summary of these problems.

Cultural Values and Potential Negative Ethical Conflicts*
Cultural Value		Possible Negative Ethical Behavior
Uncertainty Avoidance	Weak	Failure to accept consistent procedures
Uncertainty Avoidance	Strong	Focus on rules to the exclusion of asking whether the procedure leads to an ethical outcome.
Individualist vs. Collectivist	Individualist	Failure to appreciate the existence and the efficacy of the self-correcting mechanism of family face.
Individualist vs. Collectivist	Collectivist	Failure to "blow the whistle" on a member of the group to force a correction of the problem in a timely manner.
Masculinity vs. Femininity	Masculinity	Focus on aggressive client generation and retention that may compromise the firm.
Masculinity vs. Femininity	Femininity	NA
Power Distance	Large	Failure to follow the spirit of the law.
Power Distance	Small	NA
Short vs Long Term Perspective	Short	Short-cuts to achieve performance goals.
Short vs Long Term Perspective	Long	NA

* Adapted from Table 1, page 11.

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Chow, C. W., Y. Kato and K. A. Merchant. 1996. The use of organizational controls and their effects on data manipulation and management myopia: A Japan vs. U.S. comparison. Accounting, Organizations and Society 21(2-3): 175-192. (Summary).

Hofstede, G. 1980. Cultures Consequences: International Differences in Work-Related Values. Newbury Park, CA: Sage.

Hofstede, G. 1987. The cultural context of accounting. In Accounting and Culture: Plenary Session Papers and Discussants' Comments from the 1986 Annual Meeting of the American Accounting Association, edited by B. E. Cushing. American Accounting Association: 1-11. (Summary).

Hofstede, G. and H. Schreuder. 1987. A joint reply to Montagna. In Accounting and Culture: Plenary Session Papers and Discussants' Comments from the 1986 Annual Meeting of the American Accounting Association, edited by B. E. Cushing. American Accounting Association: 29-30. (Summary).