Organisational culture and attitudes towards financial statements : an analysis

Abstract

PURPOSE: This study determined the levels of trust and reliance Maltese SMEs place on financial statements and established the organisational culture of such SMEs. Then, an analysis was carried out as to whether organisational culture is associated with different levels of trust and reliance on financial statements. Lastly, an evaluation was made on the results of the different categorisations of culture. DESIGN: The objectives were achieved by using a quantitative methodology. A survey questionnaire was devised electronically and subsequently sent to directors of Maltese SMEs for self-administration (n = 127). FINDINGS: The levels of trust and reliance on financial statements are moderately high in Maltese SMEs, where trust was found to be slightly higher than reliance. A positive correlation also exists between the two. The most common and strongest culture in Maltese SMEs is the Clan, while the Adhocracy is both the weakest and least common culture. In the other categorisations of culture, the Internal and Flexibility cultures prevailed. Maltese Clan SMEs rely on financial statements significantly more than Adhocracy SMEs do, however they have the same level of trust in financial statements. In two categorisations of culture, as the strength of the dominant culture increases, the trust in financial statements decreases. Furthermore, the Adhocracy strength is negatively related with reliance, while the Market strength is positively correlated with trust. More significant findings on attitudes towards financial statements are bound to result when organisational culture is segmented into more than two different cultures types. CONCLUSIONS: It can be concluded that in certain instances, organisational culture is indeed associated with different attitudes towards financial statements. This has implications for the local accounting professionals, as their ability to contribute towards decision making can be affected by the employing SME’s culture. VALUE: This study is the first locally to bridge the areas of organisational culture and accounting. This research can aid the relevant entities in hosting information sessions on organisational culture and its effects, for both SME directors and accounting professional. Other areas of research also stem from this study.