Cultural Values and Tax Accounting Decisions

Vol. 3 No. 2

Year : 2008

Issue : Sep-Nov

Title  : Cultural Values and Tax Accounting Decisions 

Author Name  : Stephen J.J.Mcguire, David Hossain, Edward Lance Monsour 

Synopsis : 

We examined ethically-charged business and tax accounting decisions made by 598 Arab, Chinese, Latin American, Iranian, American, and Vietnamese students. Respondents indicated decisions on 11 situations, and separately provided data on their cultural values, education, work and managerial experience. Our purpose was to test hypotheses that individual-level cultural values, education and experience, and the interaction of values and education/ experience affected the decisions people made. In other words, shed light on the “why” behind differences in intentions. Business managers often face challenging situations that require ethical reasoning. Accountants preparing tax statements are frequently required to make decisions about ambiguous situations. In the U.S, tax preparers are expected to follow the American Institute of Certified Public Accountants' standards of ethical tax practice. While the laws for tax preparation are of course country specific, common dilemmas are faced by tax accountants worldwide, such as dealing with estimates and correcting errors unlikely to be caught by authorities. Result indicate that six cultural values, Being orientation, Determinism, Power Distance, Uncertainty Avoidance, Collectivism, and Facework were significant predictors of business and tax accounting decisions in 11 out of 11 scenarios, when controlling for age and gender. In most cases, we failed to find that work experience, years of study, accountancy studies, or managerial experience were significant predictors. However, we did find that the interaction of education and experience with cultural values moderated the relationship between the six cultural values and business and tax accounting decisions.