Ethical Culture and Financial Reporting: Understanding Financial Reporting Practice within Javanese Perspective

Abstract

This study is a case study conducted in an Indonesian insurance company. The aim of the studyis to understand the dynamics of financial reporting in the company. Ontologically, this study isbuilt on a belief that financial reporting practice is a socially constructed reality. As a sociallyconstructed reality, such a practice involves an interaction among social actors, and betweenorganisational actors and the institutional and cultural environment in which the company operates.The main research question of this study is how organisational culture shapes the companyon the construction of its financial reporting practice. This study reveals that the companyis committed to quality financial reporting because such reporting can be used to gain legitimacyand to maintain social harmony. The company conducts itself in this way is because itreflects Javanese culture, a dominant culture in Indonesia. Furthermore, this study concludesthat the way the actors in the company construct financial reporting practice is influenced by itsorganisational culture. The organisational culture of the company, which reflects Javanese culture,is able to shape the behaviour of its actors from the top level to lower levels to conductethical and transparent business practice. Thus, as Hines (1988) claims, this paper concludesthat financial reporting practice is a socially constucted reality. Copyright © www.iiste.org