AN EMPIRICAL ANALYSIS OF CULTURE AND ACCOUNTING MODELS IN ASIA

Culture has important influence on accounting and disclosure practices. This paper furthers this cultural research and accounting classification schemes in general. To examine the relationship between culture and accounting models, hypothesized cultural pairings of countries within Asia are constructed and tested by rank‐wise comparisons of observed accounting and reporting practices with all possible pairs. The analysis provides confirmation of relationships for two of the six hypothesized pairs using three approaches. There appears to be a high correspondence in the accounting practices within certain pairs of Asian countries sharing common cultural origins. Further, through exploratory Q‐factor analysis and cluster analysis, groupings of countries within Asia are identified, on the basis of observed accounting practices. This again provides evidence that the cultural diversity of Asia may contribute to differences in accounting and reporting practices. A limited interpretation of the resultant groupings is provided.