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Impact of Cultural Dimensions on Accounting Practices in Sri Lanka: Study of Accounting Professionals’ Perspective


The accounting harmonization process involved in improving the compatibility of the accounting practices while minimizing the degree of variance. This process of ordering different accounting practices is vulnerable to so many pressures namely; political, cultural and legal. Consequently, Sri Lanka as a Multifaceted and multicultural country experience this issue severely. However, there’s a shortage of researches that investigate cultural trajectories that influence on accounting practices in the Sri Lankan context. Therefore, the study overviewed the impact of the cultural dimension on accounting practices, particularly in Sri Lanka. Thereby, the study established a quantitative approach via disseminating 150 questionnaires among accounting professional following a convenience sampling technique. The study articulated Hofstede’s cultural dimensions including; power distance, individualism vs. collectivism, uncertainty avoidance, masculinity vs. feminity, long term vs. short term, indulgence vs restraints and Gray’s accounting practices including professionalism vs. statutory control, uniformity vs. flexibility, conservatism vs. optimism, secrecy vs. transparency. Then, the study employed Exploratory Factor Analysis (EFA) to determine cultural dimensions’ influence on accounting practices along with the Principal Component Analysis and Varimax extraction. The extracted factors accommodated into the multiple regression model to ascertain the relationship between cultural dimensions and accounting practices. The findings emphasized that power distance and individualism as the most dominant cultural dimensions in the Sri Lankan context and subsequently, that led to uniformity and secrecy in accounting practices. As a result, the study developed a model appropriate to the Sri Lankan context integrating Hofstede’s and Gray’s dimensions. In conclusion, the study reflected that accounting standards adopting process in Sri Lanka require to absorb cultural influence to smooth the regulatory application.

Keywords: Cultural dimensions, Accounting practices, Accounting professionals