Sociocultural IFRS value analysis in Estonia, Latvia and Lithuania
ENEstonia, Latvia and Lithuania form the Baltic region of the Central and Eastern European countries (CEEC). These countries share a past linked with variety of countries including Scandinavian countries like Sweden and Finland, Germany and Poland and a common fate of being economies emerging from several decades under the domination of the Soviet Union. This paper examines the sociocultural potential of each country to establish and sustain sufficiently high quality financial reporting to support continued economic growth and an appropriate allocation of international capital. The analysis is based on previous research into cultural accounting value methods. That research examined Hofstede cultural value dimensions and corresponding Gray accounting value dimensions to develop country specific accounting value profiles that are compared with a posited ideal IFRS favorable accounting value profile. Other research has quantified a country’s sociocultural IFRS orientation using a Composite IFRS Orientation Index and an Expanded IFRS Orientation Index, the latter incorporating additional sociocultural factors of perceived corruption, political risk, educational level, and regulatory business orientation. Based on this analysis, opportunities for the improvement of financial reporting and the financial reporting infrastructure of these countries are discussed. Key Words IFRS, Hofstede, Gray, Estonia, Latvia, Lithuania.
