Hofstede

1
Hofstede

• Cultural Constructs
• Individualism/Collectivism
• Power Distance
• Uncertainty Avoidance
• Gender
• Relate these concepts to professionalism, and the
  possibility of developing an international Code
  of Professional Conduct (book, Cohen, Pant and
  Sharp)

2
Cohen, Pant, and Sharp

• A code of conduct must be relevant to
  professional practice in all countries in which
  it will operate.
• A code of conduct must be consistent with a
  consensus view of professionals worldwide.
• This includes both general conduct and specific
  action guidelines.
• Provides a framework for the examination of
  cultural and socioeconomic factors which may be
  barriers to a professions international code of
  conduct.

3
Framework for Evaluating International Codes of
Conduct

• Often there is a difference in the level of
  development of a profession when comparing
  developed countries and less developed countries.
• Economic resources taken for granted in developed
  countries may not be available in less developed
  countries.

4
Framework for Evaluating International Codes of
Conduct

• A countrys level of development within the
  profession and the availability of economic
  resources are considered to be the socioeconomic
  factors.
• Hofstedes four dimensions of national culture
  can be used to evaluate a code in terms of
  cultural beliefs.

5
Professional Commitment

• What is professional commitment?
• Professional commitment is the relative strength
  of identification with and involvement in the
  profession
• Professional commitment entails
• (1) belief and acceptance of the goals and values
  of the profession,
• (2) a willingness to exert effort on its behalf,
• (3) a desire to maintain membership in the
  profession.
• Professional commitment is seen as a
  socialization process.

6
Professional Commitment

• Why is professionalism important?
• Professionalism vs. Statutory Control...
• how does this relate to different users of
  financial information, and relevance of financial
  information presented to users?
• Professionalism is a significant accounting value
  dimensions because accountants are perceived to
  adopt independent attitudes and to exercise their
  individual professional judgments, to a greater
  or lesser extent, throughout the world.

7
Professional Commitment

• Cohen, Pant and Sharp
• The notion of an autonomous profession appears to
  be based on an individualist value that the
  members of the profession should not identify
  solely with the organization with which they are
  associated by employment.
• Rather, professionals should maintain their
  allegiance to the code of a more abstract, more
  distant profession.
• Allegiance is not to a group of people, but to a
  set of standards.
• Hall
• Identified an inherent belief that individuals
  should have the right to make decision in their
  work without the approval of others.

8
Professional Commitment

• Relate this concept to
• uncertainty avoidance, individualism/collectivism,
  power distance
• legal, prescriptive emphasis vs. independent
  judgment.
• What do you think about these ideas?
• Do you accept them as stated?
• Would you like to test them?
• How would you go about designing a research
  project to test them?
• Which of the cultural dimensions are likely to be
  important when evaluating differences in
  professional commitment?

9
Cognitive Development Model of Ethical Development

• Kohlberg expanded Piagets work with children to
  the study of cognitive moral development of
  humans throughout their life.
• Kohlberg defines three levels of moral reasoning
• Preconventional level
• focus is on self and and the possibility of
  punishment
• Conventional level
• focus is on relationships and social norms
• Postconventional level
• focus is on individually-held principles of
  conscience

10
Defining Issues Test (DIT)

• Rest developed the DIT in 1979 to be an objective
  test of ethical development based on Kohlbergs
  six stages.
• The output of the DIT is a continuous variable,
  the P score.
• It is interpreted as the relative importance a
  subject gives to principled moral considerations
  in making a decision on ethical dilemmas.

11
Cultural Relativism

• The rationality of any behavior should be judged
  in terms of its own cultural context, and not
  from that of an outsider.
• What does this imply about the ability to
  identify underlying moral constructs?
• IS the ability to identify moral issues,
  stakeholders, etc., different from behavior?
• DIT research
• No differences in ability to identify underlying
  issues
• In general, people proceed through a
  monotonically increasing function of moral
  development this seems to hold for
  cross-cultural studies.

12
Accountants attitudes toward professionalism
USA vs. Taiwan and Korea
13
Differences in the Accounting Profession USA,
Taiwan, South Korea

• USA
• has evolved over more than 100 years,
• strong private sector standard setting,
• due process in standard setting,
• has been evaluated as one of the most ethical job
  categories in USA,
• Code of Professional Conduct
• Where is USA on relevant cultural dimensions?

14
Differences in the Accounting Profession USA,
Taiwan, South Korea

• Taiwan
• did not emerge as a country until after WWII
• profession has evolved rapidly,
• in some respects is patterned after profession in
  USA
• Accounting Research and Development Foundation is
  similar to the FAF in the USA
• Financial Accounting Standards Committee is
  similar to FASB
• Taiwan has an SEC with a function similar to SEC
  in USA, also officially sanctions standards as
  issued by FASC
• Code of Professional Conduct
• Where is Taiwan on relevant cultural dimensions?

15
Differences in the Accounting Profession USA,
Taiwan, South Korea

• South Korea
• Prior to 1960, accounting information consisted
  solely of cash receipts and disbursements and
  transaction processing
• Only in past few decades has there been an
  emphasis on providing information useful for
  decision-making
• KAA (Korean Accounting Association) identified
  the fundamental problem of accounting education
  in Korea as the relative lack of importance of
  accounting as perceived by the public

16
Differences in the Accounting Profession USA,
Taiwan, South Korea

• South Korea
• Prior to 1980, auditing in Korea was promoted by
  government planners as part of economic
  development programs rather than as an important
  source of financial information for investment or
  tax purposes
• Prior to 1980, there were few licensed auditors
• Prior to 1980, auditors were assigned clients by
  the government in a general ration to firm size
• Little competition among accounting firms
• Audit opinion prior to 1980 was a response to a
  governmental regulation
• Where is South Korea on relevant cultural
  constructs?

17
Professional Commitment

• What hypotheses might you draw about professional
  commitment of auditors in South Korea, Taiwan,
  and USA?
• Dependent Variable
• Professional commitment, measured by 14-item scale

18
Professional Commitment

• Independent Variable
• Home country (surrogate for cultural variables)
• USA
• High individualism (91)
• Small power distance (40)
• Weak Uncertainty avoidance (46)
• Taiwan
• High collectivism (17)
• Large Power Distance (58)
• Strong Uncertainty Avoidance (69)
• South Korea
• High collectivism (19)
• Large Power Distance (60)
• Strong Uncertainty Avoidance (85)

19
Professional Commitment

• Covariate
• Experience
• (because PC is conceptualized as a socialization
  process over time)
• Results
• 1.) Significant difference in professional
  commitment across three countries.
• Mean PC (higher number is higher P)
• USA 3.40
• Taiwan 3.57
• S. Korea 3.09
• overall 3.41

20
Professional Commitment

• 2.) Paired comparisons
• Taiwan vs. USA
• NO DIFFERENCE!
• Taiwan actually has a slightly higher average
  numeric score, but not significantly different.
• Taiwan vs. South Korea
• Significantly higher
• USA vs. South Korea
• Significantly higher
• What are some reasons for this?
• What are some weaknesses of the experimental
  design?