4. Secrecy versus transparency. This value reflects a preference of confidentiality and the disclosure of information about the business only to those who are most closely involved with its management and financing, as opposed to a more transparent, open, and publicly accountable approach. Linking with Hofstede’s dimensions of Uncertainty Avoidance, Power Distance and Masculinity, Gray proposed: “The higher a country ranks in terms of Uncertainty Avoidance and Power distance and the lower it ranks in terms of Individualism and Masculinity then the more likely it is to rank highly in terms of Secrecy”.
Gray’s framework led to an increase in studies relating culture and accounting in later studies, and also another increase in studies applying Hofstede’s value dimensions to various aspects of accounting.
Some literature developed and critically evaluated the Hofstede-Gray framework on a theoretical basis, such as Perera (1989, cited in Shalin, 1999),and Perera and Matthews (1990, cited in Shalin, 1999), who built on Gray’s theory to propose a number of hypotheses relating societal values to accounting sub-cultural values. Perera suggested that a combination of accounting sub-cultural dimensions have considerable influence on accounting practices, and he further suggested that social values are affected by a broad set of environmental factors including economic variables, and analyzed the Anglo-American and Continental European systems of accounting. Extending his discussion to developing countries, he suggested that transferring accounting skills from Anglo-American countries to developing countries is unlikely to be appropriate, as these countries typically have inadequate professional subcultures to develop suitable standard accounting skills1; others such as Baydoun and Willett (1995, cited in Shalin, 1999), and Willett et al. (1997, cited in Shalin, 1999), critically evaluated Gray’s theory and suggested that although Gray’s dimensions may possibly help us understand how social factors affect the technology of accounting, certain pure technical aspects of accounting, which are also pertinent to the question of cultural relevance, should also be considered more formally.
Some studies attempted to apply Hofstede’s theory and his proposed dimensions of culture to aspects of accounting, mainly two aspects. One side employed Hofstede’s dimensions in the context of studying management control systems within firms. Another side applied the Hofstede-Gray framework to a particular country or a set of countries to test the validity of the underlying theory. One example is Gehrardy (1990), who attempted to test the Hofstede-Gray framework by applying it to accounting systems found in West Germany. He found that Gray’s theory was unable to explain the relationship between accounting and cultural value dimensions in an entirely satisfactory manner2. Eddie (1991), who looked for association between societal values and accounting sub-culture values by studying thirteen countries of the Asia Pacific region found support for Gray’s theory, confirming all the predicted signs of association between societal and accounting values; Chow et al (1995), who applied Hofstede-Gray model to the case of China, and suggested that given the current state of the accounting profession, and the accounting measurement and disclosure in China, the development of the accounting system will be constrained by the influence of China’s culture and its sub-culture; Salter and Niswander (1995), who tested the Hofstede-Gray framework based upon data from countries drawn from Gray (1998), and concluded that Gray’s model is the best when explaining actual financial reporting practices and is relatively weak in explaining extant professional and regulatory structures from a cultural base3.