Current Business and Legal Issues in Japan's Banking and Finance Industry

Misawa, Mitsuru

doi:10.1142/7535

Cited by 1 publication

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“…Such political interference and ad hoc strategies led to further distrust of the Japanese accounting system and resulted in the so-called “legend problem.” Largely as a result of gaiatsu from the US (the Big 5 accounting firms in particular), it became mandatory for Japanese financial statements written in English to include notations or “legends,” such as “this is prepared in accordance with Japanese accounting standards, and not under international accounting standards” (Misawa, 2011, p. 11). From 1999 to 2004, these legends were attached to financial statements to draw overseas investors' attention so they could distinguish so-called “inferior” statements based on J-GAAP from “superior” statements based on US-GAAP or IAS (Nippon Keidanren, 2003; Ministry of Economy, Trade and Industry (METI), 2004).…”

Section: The Japanese Accounting Big Bangmentioning

confidence: 99%

“…The legend problem reflected and drew attention to the “inferior” quality of financial reporting in Japan and could be considered a humbling defeat for Japanese companies. Nippon Keidanren was strongly against the inclusion of legends and mobilized support for significant reforms (Nippon Keidanren, 2000; Misawa, 2011, pp. 277-278).…”

Section: The Japanese Accounting Big Bangmentioning

confidence: 99%

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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 Japanese Accounting Big Bangmentioning

confidence: 99%

Section: The Japanese Accounting Big Bangmentioning

confidence: 99%