The Case for Economic and Accounting Dualism: Towards Reconciling the Japanese Accounting System with the Global Trend of Fair Value Accounting

Tsunogaya, Noriyuki; Okada, Hiromasa; Patel, Chris

doi:10.2202/2152-2820.1009

Cited by 9 publications

(9 citation statements)

References 43 publications

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“…92-93). The implications of these external pressures were profound for some deeply embedded institutionalized values, such as lifetime employment, approach to stakeholders, keiretsu (large interfirm networks or conglomerates) and the prioritization of production over finance (Tsunogaya et al , 2011; Tsunogaya and Chand, 2012; Yonekura et al , 2012). Destler and Sato (1982, p. 279) note that “the US government employed strong, visible pressure as a catalyst for Japanese policy change.…”

Section: The Influence Of Gaiatsu Versus Naiatsu On Economic and Accounting Reformsmentioning

confidence: 99%

The impact of external pressures (gaiatsu) and internal pressures (naiatsu) on Japan's accounting reforms since the late 1990s

Tsunogaya

Patel

2020

AAAJ

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PurposeThe paper extends the literature by examining the impact of politics, conflicts and compromises resulting from external pressures (gaiatsu, 外圧) and internal pressures (naiatsu, 内圧) on the convergence and globalization of accounting and accountability in Japan.Design/methodology/approachUsing Japan as a case study, it is examined how and why the stimulus for significant accounting reforms arises, how the government manages and reacts to the powerful forces of gaiatsu and how it balances naiatsu among key stakeholders.FindingsThe ongoing changes in accounting regulations in Japan are neither the result of an unmediated response to gaiatsu nor the outcome of naiatsu. Rather, Japanese accounting changes are the consequence of complex external interactions and internal compromises. Specifically, Japan demonstrates a repetitive pattern of conflict management, which alters the domestic power balance based on naiatsu, and forces the Japanese government to make compromises to policy changes initiated by gaiatsu.Research limitations/implicationsThe findings have implications for the development of accounting and accountability, the globalized business world and international accounting research because they challenge claims made by global standards setters that international standards such as International Financial Reporting Standards are superior, are built on so-called “best practices” and are relevant to all countries.Originality/valueInvoking the concepts of gaiatsu and naiatsu is a critical approach to understanding Japan's convergence toward economic liberalism and Anglo-American models of accounting and accountability.

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Section: The Influence Of Gaiatsu Versus Naiatsu On Economic and Accounting Reformsmentioning

confidence: 99%

The impact of external pressures (gaiatsu) and internal pressures (naiatsu) on Japan's accounting reforms since the late 1990s

Tsunogaya

Patel

2020

AAAJ

Self Cite

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“…However, it is clear that IFRS is not universally welcomed in Japan. Tsunogaya et al (2011) put this resistance in perspective by means of an extensive historically oriented analysis of accounting models prevailing in Japanese accounting thought and embedded in the regulatory system. Tsunogaya (2016) and Tsunogaya et al (2015) provide some insight into the structure of the debate over IFRS by analyzing the record of deliberations of the BAC during 2011 and selected episodes in 2008–2013, respectively.…”

Section: Reviews By Countrymentioning

confidence: 99%

“Forging accounting principles” in France, Germany, Japan, and China: A comparative review

Camfferman

Detzen

2018

Accounting History

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This article surveys the English-language literature on the history of financial reporting regulation in four non-English-speaking countries: France, Germany, Japan, and China. The choice of these countries was based on the availability of a sizable accounting history literature in the area surveyed. We first offer a summary of regulatory events in the four countries and suggest that the literature provides ample evidence of the countries' intricate histories of financial reporting regulation. In addition, we point to important research gaps, where we believe that the literature has significant underexploited potential, in particular by moving beyond high-level overviews of changing regulatory mechanisms to in-depth studies of regulatory change that are embedded in the local legal, political, and societal contexts. Hence, plenty of opportunities exist for further research into these countries' regulatory histories, either in terms of single-country studies or as comparative histories.

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“…Importantly, accountants are generally satisfied “to allow companies to follow accounting treatments required by the CIT [Corporation Tax Law] and to choose alternatives that serve to minimize their tax burden” (Benston et al , 2006, p. 165). This is the case for the following two reasons: because accounting treatments required by the Corporation Tax Law are based on historical cost accounting, thereby reducing the fluctuation of accounting figures in the markets (Tsunogaya et al , 2011); and because the close interaction between accounting and taxation enables most companies, including more than 2.5 million small- and medium-sized enterprises (SMEs), to save costs associated with preparing financial statements (Japanese Institute of Certified Public Accountants: JICPA, 2010). …”

Section: Introductionmentioning

confidence: 99%

“…because accounting treatments required by the Corporation Tax Law are based on historical cost accounting, thereby reducing the fluctuation of accounting figures in the markets (Tsunogaya et al , 2011); and…”

Section: Introductionmentioning

confidence: 99%

Using arguments and myths to lobby over controversial accounting issues: evidence from Japan

Tsunogaya

Hellmann²

2020

PAR

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Purpose This study aims to examine the (overt) arguments and (covert) myths the Business Accounting Council (BAC) members have used to lobby over controversial accounting issues, such as the application of fair value accounting (FVA) and the adoption of International Financial Reporting Standards (IFRS) in Japan. Design/methodology/approach The authors used a content analysis to examine 85 statements included in multiperiod BAC meeting minutes and 68 articles prepared by International Accounting Standards Board (IASB) representatives from Japan. Findings The results reveal that together with the arguments, myths were created and amplified by opponents of FVA and the Financial Services Agency to hide the latter’s strong regulatory power. They created these myths, using covert stories of the importance of manufacturing activities and tax accounting (for small- and medium-sized enterprises [SMEs]), to oppose mandatory IFRS adoption in Japan and, thus, to maintain vested rights in preparing the Japanese generally accepted accounting principles and Japanese accounting standards for SMEs. Originality/value First, this study contributes to the lobbying literature by focusing on the coalition (network) effect of influential stakeholder groups. Second, although lobbying activities have been investigated mostly using comment letters, this study reviews multiperiod BAC meeting minutes and articles prepared by IASB representatives from Japan. Third, the study examines both overt arguments and covert myths, both of which are important in unmasking the fundamental structures of power within influential organizations, such as government agencies and standard-setters.

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The Case for Economic and Accounting Dualism: Towards Reconciling the Japanese Accounting System with the Global Trend of Fair Value Accounting

Cited by 9 publications

References 43 publications

The impact of external pressures (gaiatsu) and internal pressures (naiatsu) on Japan's accounting reforms since the late 1990s

The impact of external pressures (gaiatsu) and internal pressures (naiatsu) on Japan's accounting reforms since the late 1990s

“Forging accounting principles” in France, Germany, Japan, and China: A comparative review

Using arguments and myths to lobby over controversial accounting issues: evidence from Japan

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