The Impact of Cultural Dynamics in Subsidiary Locations on Internal Control Weaknesses in Multinational Enterprises
Tracks
Jade 2
| Monday, July 1, 2024 |
| 5:00 PM - 5:15 PM |
Presenter
Mrs Yathra Gunaratne
Phd Student
Griffith University
The Impact of Cultural Dynamics in Subsidiary Locations on Internal Control Weaknesses in Multinational Enterprises
Abstract
This study examines the relationship between the cultural contexts of subsidiary locations belonging to United States-headquartered multinational enterprises (USMNEs) and the internal control weaknesses (ICW) disclosed under Section 404 of the Sarbanes-Oxley Act. By analyzing a comprehensive dataset, we identify a positive influence on the ICW of USMNEs when their subsidiaries operate in high power distance, uncertainty avoidance, or long-term orientation environments. Conversely, a negative association is noted when subsidiaries are located in more individualistic, masculine, or indulgent countries. Additionally, we reveal a positive association between cultural distance and ICW, as well as between cultural diversity and ICW. Furthermore, we find that the strength of investor protection and the presence of Big4 auditors can moderate the relationship between culture and ICW. These findings remain consistent and robust across various econometric estimations, and account for the effects of exogenous shocks. Our study emphasizes the need for tailored and context-specific internal control strategies that consider the diverse cultural landscapes within which multinational enterprises operate.
Biography
Mrs. Y.M.C. Gunaratne is a PhD student at the Department of Accounting, Finance and Economics at Griffith University, Australia. She is a senior lecturer in the Department of Management Sciences at Uva Wellassa University of Sri Lanka. She has more than 14 years of teaching experience (since May 2009) at Uva Wellassa University. Before commencing her PhD at Griffith, she was the Head of the Department of Management Sciences at Uva Wellassa University since April 2019. She holds a Bachelor of Science in Business Management degree (BSc. Special) with second class upper division honours from Wayamba University of Sri Lanka and a Master of Science in Management from Sri Jayewardenepura University of Sri Lanka. She is also a Certified Business Accountant at The Institute of Chartered Accountants of Sri Lanka. Mrs. Gunaratne teaches courses in accounting discipline covering both financial and managerial accounting. Additionally, she teaches the operations research course. She has been published in several academic journals and at national and international conferences. Mrs. Gunaratne supervised many undergraduate students at Uva Wellassa University of Sri Lanka. She serves on the editorial board for The Journal of Management and Tourism Research. Before joining Uva Wellassa University, Mrs. Gunaratne worked in KPMG, Ford Rhodes Thornton & Company, Sri Lanka.
Chair
Eunice Khoo
Senior Lecturer
Australian National University
