National culture and fraud risk: exploratory evidence

Abstract

Purpose

The purpose of this paper is to test the association between national culture dimensions and exposure to fraud with a view to drawing implications for understanding fraud risk.

Design/methodology/approach

The study is based on a sample of 66 countries. Regression analysis is conducted using Hofstede’s national culture dimensions as independent variables and fraud risk as a dependent variable. Transparency International’s corruption index was used as a proxy for fraud risk.

Findings

Results suggest high fraud risk exposure in countries with high power distance and those having limited long-term orientations.

Research limitations/implications

The study informs deeper understanding of fraud risk through analysis of fraud risk in a culturally relative sense.

Originality/value

This is the first study (known to the author) to draw the implications of national culture for understanding fraud risk.

Citation

Getie Mihret, D. (2014), "National culture and fraud risk: exploratory evidence", Journal of Financial Reporting and Accounting, Vol. 12 No. 2, pp. 161-176. https://doi.org/10.1108/JFRA-10-2012-0049