The Impact of Cultural Time Orientation on Managerial and Financial Accounting Practices

This dissertation consists of three studies investigating the influences of cultural values, specifically cultural time orientation, on internal corporate decision-making with regard to managerial and financial accounting practices.;The first study of this dissertation reviews and synthesizes the current state of empirical literature which examines the impact of cultural values on managerial accounting, financial accounting, auditing and taxation, as well as on ethical decision-making in the accounting field. This literature review concludes with a discussion of research limitations and opportunities for future investigation.;The second study examines how employees from different cultures respond to participative budgeting when the budget planning horizon is congruent or incongruent with their cultural time orientation. This study was administered via a 2x2 quasi-experiment in which cultural time orientation (short-term or long-term) was measured and budget planning horizon (short-term or long-term) was manipulated. The results indicate that satisfaction with participative budgeting is greater when participants' cultural time orientation and budget planning horizon are congruent, relative to incongruent. Also, the differential reactions between congruence and incongruence are less extreme for the Chinese participants than for the U.S. participants, which is consistent with the Confucian thought of "The Doctrine of the Mean" that teaches individuals to maintain emotional balance by constraining their positive and negative feelings.;The third study investigates the impact of cultural time orientation on segment profitability disclosure decisions. It hypothesizes that managers with a short-term orientation are more concerned with the immediate reactions from the capital market rather than the long-term competitive reactions from potential entrants in the product market. Consequently, managers will be motivated to hide abnormally low segment profits and highlight abnormally high segment profits. Conversely, managers with a long-term orientation will focus more on the long-term effects of product market competition rather than the immediate capital market reactions. Consequently, these managers will be motivated to hide abnormally high segment profits and highlight abnormally low segment profits. This study was administered via a 2x2x2 quasi-experiment in which cultural time orientation (short-term or long-term) was measured, while segment profitability (high or low) and nature of competition (potential entrants or existing rivals) were manipulated. In general, this study finds that short-term oriented managers are more likely to adjust abnormally low segment profitability upward, relative to long-term oriented managers. On the other hand, long-term oriented managers are more likely to adjust abnormally high segment profitability downward compared to short-term oriented managers.