The Relationship between National Culture and Occupational Fraud Magnitude

This study is the first to empirically investigate the relationship between national culture and fraud. We develop and test hypotheses with regard to the relationship between each of Hofstede’s six national culture dimensions (power distance, individualism, masculinity, uncertainty avoidance, long-term orientation, and indulgence) and fraud magnitude. Further, we develop and test hypotheses concerning the moderating role of fraud type (i.e., asset misappropriation, corruption) with regard to each of the six main relationships. We tested our hypotheses on a dataset of 2,888 occupational fraud cases across 32 countries, We found that two of Hofstede’s dimensions, i.e., uncertainty avoidance and long-term orientation had highly significant positive association with fraud magnitude (and two others, i.e., power distance and masculinity, had marginally significant positive associations). Further, the relationship between each of three of Hofstede’s dimensions (i.e., masculinity, uncertainty avoidance, and long-term orientation) and fraud magnitude, was moderated by fraud type. The implications of our work for both research and practice are discussed.