The Influence of Conservatism and Secrecy on the Interpretation of Verbal Probability Expressions in the Anglo and Latin Cultural Areas

Título: The Influence of Conservatism and Secrecy on the Interpretation of Verbal Probability Expressions in the Anglo and Latin Cultural Areas

Autores: Timothy S. Doupnik, Edson Luiz Riccio

Resumo/Sinopse: We use Gray’s (1988) theory of the influence of culture on accounting to develop hypotheses about the effect the interaction of the accounting values of conservatism and secrecy and the context in which probability expressions are used in accounting standards will have on accountants’ interpretations of those expressions. Specifically, we expect accountants in a high conservatism country to assign a higher (lower) numerical probability to verbal probability expressions that determine the threshold for the recognition of items that increase (decrease) income than accountants in a low conservatism country. We expect accountants in a high secrecy country to assign higher numerical probabilities to verbal probability expressions that establish the probability threshold for the disclosure of information than accountants in a low secrecy country. We survey professional accountants in Brazil (higher conservatism and higher secrecy) and the United States (lower conservatism and lower secrecy) to test our hypotheses. We obtain some support for the first conservatism hypothesis related to the recognition of income-increasing items, but no support for the second conservatism hypothesis related to income-decreasing items. We obtain stronger results in support of our hypothesis related to secrecy and disclosure. This study contributes to the literature investigating the impact of culture on interpretations of verbal probability expressions extending this line of research to the Latin cultural area. It also contributes to the literature testing Gray’s theory by testing the secrecy hypothesis at the individual accountant level.

Data de publicação: 2006

Periódico/Editora: The International Journal of Accounting (TIJA) / ELSEVIER – SCIENCE DIRECT – USA

Palavras-chave: Probability expressions; Culture; Conservatism; Secrecy; IFRSs