There are seven major divergent forces, which shape the Financial Reporting internationally. I am going to explore each one individually with references to UK, USA and Bulgarian Financial Reporting Practices. Societal values are determined by ecological influences and modified by external factors… In turn, societal values have institutional consequences in the form of the legal system, political system, nature of capital markets, patterns of corporate ownership and so on. Gray examines Hofstede cultural dimensions1, based on his study of 100,000 IBM employees in 39 countries and renames his dimensions.

Individualism vs. conservatism becomes professionalism vs. statutory control; large vs. small power distance becomes uniformity vs. flexibility; strong vs. weak uncertainty avoidance becomes conservatism vs. optimism; and masculinity vs. femininity becomes secrecy vs. transparency. Hofstede did not study Bulgaria, but he studied Yugoslavia, which still was a country then. People from the Balkan region have very similar cultures, common sense aspect and values, that is why I think it is save to claim, that Hofstede’s findings can be applied to Bulgaria as well.

As it can be seen UK and USA are very close by scale, while Bulgaria is very different. Financial Reporting cannot be explained only by cultural differences, but yet they influence a lot the accounting practices. For example UK and USA accounting are very similar, they both belong to the so called by Gray ‘Anglo’ culture and yet there are some differences influenced by other forces. Yet they are very liberal (low uncertainty avoidance), professionally organized (high individualism), flexible (small power distance) but yet secret to some extend (high masculinity) systems.

While the Bulgarian system, especially before it was influenced by the European Union, was just the opposite. There were and still are very strict rules, not much professionalism shown by accountants and auditors, the accountancy was very uniform and very secret. Financial statements were not shown to anyone but government, tax authorities and banks. This is still the case, although that some private companies are posting their statements online. Those are, however, mainly branches of multinational companies, or those that are listed on the Bulgarian stock exchange.

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