Cultural influences on Indigenous users' perception of the importance of disclosure items in financial statements : empirical evidence from Papua New Guinea

Over the past decade, the effect to harmonize financial reporting globally has gathered momentum under the auspices of the International Accounting Standards Committee (IASC) and its successor – The International Accounting Standards Board (IASB). Underlying the push for the international harmonization of accounting standards is the implicit assumption that the accounting information needs of users are similar notwithstanding their different socio-economic and political backgrounds. However, a growing body of literature argues that significant and influential differences exist between the cultural environments of the developed and developing countries which may engender differences in the information needs of financial statement users in each (Patel, 2003); Hussainey and Walker, 2009). Accounting practices in developed countries are a product of the economic, regulatory, social, and political conditions that prevail in those countries (Skinner, 2008). Transporting those practices, either overtly or in the guise of ‘international accounting standards (ASs)’, to developing countries with underlying environments that differ markedly from those of the developed countries, should not be expected to have optimum results for constituents in the developing countries. This paper reports the examination of differences and similarities in user preferences for different aspects of accounting information disclosure, with a view to explain the difference in preferences in terms of cultural grouping affiliations. It develops and tests the general hypothesis that no significant difference exists in the perceptions of financial statement users of different nationalities, especially from developed and developing countries, regarding the disclosure of accounting information in financial statements.