Some Cross-Cultural Evidence on Whistle-Blowing as an Internal Control Mechanism

Abstract

In this paper, I report on the results of an empirical examination of cultural influences on professional judgments of Australian, Indian, and Chinese-Malaysian accountants in relation to whistle-blowing as an internal control mechanism. Australia serves as a proxy for the Anglo-American cluster of countries comprising the U.S., U.K., and Canada, while India and Malaysia represent the Asian-Indian and Chinese clusters, respectively. I draw on cultural characteristics and differences among these societies to formulate hypotheses that Australian professional accountants are both more likely and more accepting of engaging in whistle-blowing as an internal control mechanism than Chinese-Malaysian and Indian professional accountants. Data were gathered through a survey questionnaire administered to samples of senior professional accountants from Big 6 (at the time of data collection) firms in Australia, India, and Malaysia. The questionnaire comprised two whistle-blowing scenarios, and used both single-attribute and multidimensional attribute measures of professional judgment. The results support my hypotheses about differences in Australian compared to Indian and Chinese-Malaysian professional judgments. Additionally, the results support my expectation that multidimensional attribute measures would have greater explanatory power than single-attribute measures, and would provide insight into complex elements involved in ethical and professional judgments in cross-cultural settings. My findings from this study have implications for the management of local and multinational enterprises. Enterprises that aim to improve effectiveness in their control systems or achieve similar levels of reliability across divisions in various countries need to implement control systems that are compatible with cultural values. Specifically, the results suggest that compared to Indian and Chinese cultures, whistle-blowing as an internal control mechanism is likely to be more effective in Australian culture.

Determinan Intensi Auditor Melakukan Tindakan Whistle-Blowing Dengan Perlindungan Hukum Sebagai Variabel Moderasi

“…Pentingnya keberadaan whistle-blowing dalam mengungkapkan kecurangan atau skandal keuangan telah banyak terbukti di awal dekade abad kedua puluh satu (Dyck et al, 2010). Efektivitas whistle-blowing dalam mengungkapkan kecurangan laporan keuangan tidak hanya diakui oleh akuntan dan regulator di Amerika Serikat, namun juga di negaranegara lain (Patel, 2003). Mengingat pentingnya peran whistle-blowing dalam mengungkapkan kecurangan keuangan, maka pemahaman atas faktor-faktor yang mendasari niat untuk melaporkan kecurangan atau penyalahgunaan aset merupakan topik yang sangat penting (Bame-Aldred et al, 2007).…”

Does National Culture Impact Capital Budgeting Systems?

“…A higher level of individualism in Australia is supported from early European settlement. From this time individuals began making their own choices on ways of life due in part to its remote location (Patel 2003). Individualism is maintained through self-focused dialogue central to education and business in Australia (Auyeung & Sands 1996).…”

From Inaction to External Whistleblowing: The Influence of the Ethical Culture of Organizations on Employee Responses to Observed Wrongdoing

“…In addition to the individual control variables of gender, tenure and age used in the present study, factors such as educational level (Near & Miceli, 1995), religiosity and ethical ideology (Barnett, Bass, & Brown, 1996) and ethical judgment (Chiu, 2003) have also been found to be relevant in explaining whistleblowing. Other relevant situational factors include role responsibility (Miceli, Dozier, & Near, 1991), role prescription (Miceli & Near, 2002), type and seriousness of wrongdoing , intentionality of wrongdoer (King, 2001), cohesion among employees (Horne, 2001), national culture (Chiu, 2003;Patel, 2003;Tavakoli et al, 2003) and organizational structure (King, 1999). Not only would the inclusion of additional factors in future studies increase the explanatory power of the model, the operationalization of the factors in the present study could probably also be improved upon.…”

“…First, although many studies of the relationship between situational variables, such as national culture (Chiu, 2003;Patel, 2003;Tavakoli, Keenan, & Crnjak-Karanovic, 2003), organizational structure (King, 1999), and type and seriousness of the wrongdoing and employees" response to observed wrongdoing have been conducted, the ethical culture of organizations as such has not been empirically examined. In this paper, the Corporate Ethical Virtues Model (Kaptein, 2008b), consisting of eight dimensions, will be used to assess the ethical culture of organizations.…”