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Determinants of accounting choices in Egypt

Colin. R. Dey, John R. Grinyer, C.Donald Sinclair and Hanaa El-Habashy

Journal of Applied Accounting Research, 2008, vol. 8, issue 3, 48-92

Abstract: In recent years, Egypt has been developing rapidly from a socialist to a fully developed market-based economy. One may expect that this economic transition towards a more capitalist orientation will influence the country’s cultural and socio-economic environment, and consequently the behaviour of its corporate managers. The increasing separation of ownership and control of capital could be expected to increase agency problems associated with managerial decisions. In these circumstances, it should be interesting to identify whether ‘positive accounting’ hypotheses would apply in such an environment. Therefore, this paper examines the relevance to financial reporting in Egypt of some established positive accounting theory hypotheses in addition to a new hypothesis related to taxation. The evidence of the study is consistent with the validity of the conventional ‘bonus’ and ‘debt’ hypotheses and the new ‘taxation’ hypothesis. These conclusions are also consistent with recent empirical studies of cultural and socio-economic change in Egypt.

Keywords: Egypt; Socio-economic environment; Accounting practices; Managerial behaviour (search for similar items in EconPapers)
Date: 2008
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