A Cross‐Cultural Examination of Auditors' Willingness to Relocate in Public Accounting: Evidence from Hong Kong and the United States

• DOI: http://doi.org/10.1111/ijau.12052
• Published date: 01 March 2016
• Date: 01 March 2016

A Cross-Cultural Examination of Auditors’ Willingness to Relocate in Public

Accounting: Evidence from Hong Kong and the United States

Philip Law, Desmond Yuen and Adrian Lei

University of Macau, Macau

This empirical study examines the determinants of factors influencing auditors’ willingness to relocate nationally

and internationally in public accounting on two cultural dimensions. This is the first study in the cross-cultural

literature to examine this under-researched issue. A theoretical model is developed from family systems theory

and social role theory. Logistic regression models (Models 1–16) are performed. While a cultural difference

between auditors in the United States (US) and in Hong Kong (HK) might have been expected, we find similar

results for both groups of auditors. Spouse willingness has the highest explanatory power among the familyfactor

variables. Other family variables are also found to be significant. Male auditors are more willing to relocate

nationally and internationally than female auditors. Furthermore, auditors’ career plateau has the highest

explanatory power among the organizational variables, followed by perceived organizational support and

auditors’ compensation. Our results support family systems theory and social role theory. A series of sensitivity

analyses validate our main results and indicate the robustness of the findings. This study provides important

implications for human asset accounting and the cross-cultural accounting literature.

Key words: Auditors’ relocation, family systems theory, social role theory, human asset accounting

1. INTRODUCTION

The relocation of skilled employees across national

borders has become a key business issue (Dupuis, Haines

& Saba, 2008). Relocation in this study is defined as

auditors moving to a different location within the same

firm, or switching to other public accounting firms. In

today’s competitive environment, it is common for public

accounting firms to relocate their employees nationally

or internationally for several reasons. First, with the

presence of clients located both locally and overseas,

accounting firms try to fully utilize their human assets so

as to sustain competitive advantage in the market. This

can serve client needs and help them to cope with firms’

expansions (HKICPA, 2009, 2010a, 2010b).

Second, globalization means that cross-border

transactions have become commonplace in many

countries. Economies in Eastern Europe and Latin

America have been growing, and more international

business transactions have come to be conducted with

other Westerncountries. The promising economic growth

in Asia-Pacific regions such as China, Hong Kong (HK),

Japan, Korea and Australia brings greater volumes of

trade and creates more global job opportunities for

accounting professionals. The economic success for the

Asian ‘five dragons’ may be attributed to the cultural

heritage of Confucianism and the cash value of Confucian

values (Hofstede & Bond, 1988; Bond & Hofstede, 1989;

Hofstede, 2001). According to a corporate relocation

survey conducted by the US Atlas Van Lines

Incorporation (Atlas Van Lines, 2012), among firms

relocating employees between the US and another

country,the most frequent destinations of transfer in 2011

were Asian (41 per cent) and Western European (35 per

cent) locations. With the continuation of international

businesses, many accountants or auditors may explore

options relating to relocations in their careers.

Third, adoptions of International Financial Reporting

Standards (IFRSs) by many countries also facilitate

auditors’ job mobility. For example, the IASB and the US

Financial Accounting Standards Board (FASB) have

signed a memorandum of understanding to agree to the

convergence of US Generally Accepted Accounting

Principles (US GAAP) and IFRSs. Many countries, such

as HK and Australia,as well as some European countries,

also support the use of IFRSs in preparing financial

statements.Accountants and auditors who are conversant

with the reporting requirements of IFRSs are highly

sought after by multinational corporations. This will thus

enhance the job mobility and international relocation

opportunities of accounting professionals. In addition,

the global use of IFRSs will significantly reduce the costs

of doing business in the long run. Hence, the future

prospects for relocation for accounting professionals are

promising (Economist, 2006; HKICPA, 2011).

However, cultural concerns may be a factor in

decisions to relocate (Hofstede, 1980a). In many

companies, employee relocation is a primary method

of human resource development (Lé, Tissington &

Budhwar, 2010). Themanagement literature indicates that

understanding employees’ attitudes towards relocation is

important for at least three reasons: (1) employers use

employee transfers as a strategy for staffingorganizations

and developing managers (Moore, 2002); (2) employees

use transfers as a strategy for personal career

enhancement (Mignonac, 2002; Konopaske, Robie &

Ivancevich, 2005); and (3) evidence indicates that many

employees are becoming less willing to relocate

geographically and cross-culturally (Harvey & Buckley,

1998; Moore, 2002; Baldridge, Eddleston & Veiga, 2006;

Konopaske, Robie & Ivancevich, 2009; Lé et al., 2010).

Refusal to relocate will have a great impact on the many

organizations that are already facing acute shortages of

trained and qualified staff (Tang, 2000; Hall & Smith,

2009). This is particularly true for auditors in public

accounting (Bullen & Flamholtz, 1985; Hall & Smith,

Correspondence to: Philip Law,Assistant Professor ofAccounting, Room

3067, Department of Accounting, Faculty of Business Administration,

FBA, University of Macau,E22, Avenida da Universidade, Taipa, Macau,

China. Email: PLaw@umac.mo

International Journal of Auditing doi:10.1111/ijau.12052

Int. J. Audit.

© 2015 John Wiley & Sons Ltd ISSN 1090-6738

20: 17 41 (2016)

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2009; Law, 2009, 2010a) and in organizations’ executive

ranks (Moore, 2002). Dual-career couples will be more

resistant to relocating internationally due to family

concerns, the spouse’s career and the stress associated

with the relocation (Harvey & Buckley, 1998). This stress

is heightened when the trailing spouse cannot find

employment during the overseas assignment. According

to preference theory (Hakim, 2006), the heterogeneity of

women’s preferences creates different interests between

groups of women. If the expatriate is a work-centred

woman and the trailing spouse is the husband, the man’s

role in the family unit would be altered dramatically. For

example, if the work-centred woman is pregnant, there

may be difficulties encountered by auditor mothers in

their hierarchical progression within the Big 4 firms,

particularlyregarding childcare and pregnancy (Dambrin

& Lambert, 2008). That might create additional tension

and stress for the family (Harvey & Buckley, 1998). In

addition, it is particularlypredominant in HK culture that

men are more likely to be the primary breadwinners for

families and hold most of the senior positions in the

accounting profession (Law & Hung, 2009; Law, 2010a).

Given the normative nature of gender roles, women are

more likely to be influenced by their family role (Komori,

2008; Whiting, 2008; Kornberger, Carter & Ross-Smith,

2010; Law, 2010a).

In this study,we find similar results for both groups of

auditors. Spouse willingness has the highest explanatory

power among the family factor variables. Other family

variables are also found to be significant. Male auditors

are more willing to relocate nationally and internationally

than female auditors. Furthermore, auditors’ career

plateau has the highest explanatory power among the

organizational variables, followed by perceived

organizational support and auditors’ compensation. Our

results support family systems theory and social role

theory.

1.1. Motivations for this study

Though prior research has examined employees’

willingness to relocate (Brett & Reilly, 1988; Landau,

Shamir & Arthur, 1992; Brett & Stroh, 1995; Mignonac,

2002; Moore, 2002; Challiol & Mignonac, 2005;

Konopaske & Werner, 2005; Baldridge et al., 2006; Dupuis

et al., 2008; Konopaske et al., 2009; Lé et al., 2010), such

studies have primarily been conducted in Western

environments. Hofstede et al. (1990) and Hofstede (2001)

found that there are significant differences in

organizational cultures, practices, ways of thinking and

attitudes between the Westand the East (see Section 2.2).

His research indicated that there are individual value

differences between nations (Hofstede, 1998). Given the

same research questions, Hofstede (2003) further

indicates that the type of respondents within a given

cultural group can affect the results. Moreover, there are

cultural constraints in management theories and

practices across nations (Hofstede, 1994b). Konopaske

et al. (2005) suggest that their US findings may not be

generalizable to global managers living in other

countries, and thus future studies in other settings are

recommended.

Do American theories or practices apply abroad

(Hofstede, 1980b)? The US is a country with high

individualism, small power distance, weak uncertainty

avoidance, low long-term orientation and a masculine

culture, whereas HK is a Special Administrative Region

of China with a collectivist society, large power distance,

weak uncertainty avoidance, high long-term orientation

and a masculine culture (Hofstede, 1980a, 2001).

Hofstede (1980b) indicates that differences among

cultures in the five dimensions of his study may have

very different effects in different countries. Hofstede

(1994a) found that differences in culture show set limits

to the validity of management theories across borders.

Management practices in a country are culturally

dependent, and what works in one country does not

necessarily work in another (Hofstede, 1994a). For

example, Hofstede (1980b) indicates that identical

personnel policies may have very different effects in

different countries and even within countries for

different subgroups of employees. However, it has taken

much longer for US researchers to accept that not only

management practices but also the validity of theories

may stop at national borders (Hofstede, 1994b). As a

result, Hofstede (1980b, 1994a, 1994b) reveals that the US

ways of thinking, as well as practices, theories and

findings, may not be applicable to other countries.

In addition, Hofstede (2001) and Minkov and Hofstede

(2012) examined in-country regions and cultural

indicators and found that even in regions sharing

common languages, religions, ethnic groups, historical

experiences and various traditions, the results provided

strong evidence that they had quite different scores on

the cultural dimensions and were consequently

distinguishable. Liao and Bond (2010) indicate that

culture influences how people perceive stimuli and

behave under various circumstances. Therefore,Hofstede

recommends and encourages more replications and for

quantitative research to be done in other countries in the

future direction of cross-cultural studies (Hofstede &

McCrae, 2004; Hofstede, Hofstede & Minkov, 2010).

Researchers indicate that there are differences between

Western and Eastern minds (Hofstede & Bond, 1988;

Hofstede, 1994a, 1998, 2001; Hofstede et al., 2010).

Long-term orientation (LTO) stands for the fostering of

virtues oriented towards future rewards, in particular

perseverance and thrift (Hofstede, 2001, p. 359). The US

has a low LTO score (29), whereas HK has the highest

LTO score (96), which may be partly attributable to the

cultural heritage of Confucianism in the East (Bond &

Hofstede, 1989; Hofstede, 1994c, 2001). Furthermore,

Hofstede, Bond and Luk (1993) found that individuals’

values and perceptions are related to various

demographic characteristics and the cultural

backgrounds of the respondents. Therefore, it will be

worth exploring and interesting to know whether the

prior Western study results can be applied to the East,

and this has motivated us to carry out this research to

capture survey responses regarding auditors’ attitudes

on relocation nationally and internationally in two

cultural settings. A report by the USAdvisory Committee

on the Auditing Profession (ACAP, 2008) revealed that

given the rise of dual-career couples in the audit

profession and coupled with family requirements,

relocation is an important considerationin an audit career

path. With the emergence of dual-career couples in the

audit/accounting profession, this research provides a

timely and better understanding of this under-researched

area in today’s contemporary accounting climate. With

the growing internationalization of business and

promising economic growth in the Asia-Pacific region,

auditors could explore more overseas options or consider

relocations in their career paths. Though some prior

cross-cultural research in accounting has been carried out

P. Law et al.

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