The "Big Bang"? An Ambivalent Japan Deregulates Its Financial Markets

Lincoln, Edward J.; Litan, Robert E.

doi:10.2307/20080767

Cited by 18 publications

(4 citation statements)

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“…Criticisms were inevitably directed at the quality and relevance of the accounting and accountability systems. Corporate annual reports in Japan conveyed relatively little useful information because of the reliance on information channels characterized by close personal or corporate ties rather than public channels and reliance on historical cost rather than market value (Lincoln and Litan, 1998). Problems caused by strict compliance with historical cost were highlighted by authoritative organizations such as the Economic Council (1996), the Committee of Financial System Research (1997) and the Securities and Exchange Council (1997).…”

Section: The Japanese Accounting Big Bangmentioning

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 Japanese Accounting Big Bangmentioning

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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“…Measures included: introducing new investment trusts and over-the-counter sales of investment trusts by banks and other financial institutions; full liberalization of dealings in securities derivatives; promoting entry of banks, securities companies, and insurance companies into each other's business; switching from the licensing system to a registration system for securities companies; liberalizing cross-border capital transactions and foreign exchange business; fully liberalizing brokerage commissions; abolishing the requirements to trade stocks only through stock exchanges; introducing stock exchanges for start-up companies; and improving disclosure systems and setting up fair trading rules (Lincoln and Litan 1998).…”

Section: Box 1: Brief History Of Structural Reforms In Japanmentioning

confidence: 99%

Banking Crises and 'Japanization': Origins and Implications

Kawai

Morgan²

2013

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.

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“…It is not at all clear that many people will broaden their savings portfolios to include asset-backed securities, foreign mutual funds, derivatives, foreign bank accounts, and other investment opportunities. In the absence of an eager household sector, financial deregulation could leave the Japanese financial system under the continued domination of banks, which may end up as the primary holders of the new financial instruments" (Lincoln and Litan, 1998).…”

Section: Who Will Manage the Money?mentioning

confidence: 99%

“…Life insurers gained entry to the mutual fund business, and the state -owned postal savings and life insurance bureaus (Yucho and Kampo) received permission to hire specialist investment managers to handle over ¥300 trillion in postal saving system assets (US$2.5 trillion; Asia Agenda International 2001). As Lincoln and Litan (1998) have noted, it was hoped that "by allowing Japanese pension funds greater investment freedom-specifically, broader authority to purchase equities, domestic and foreign-the Big Bang [would] help ease the pressure on Japanese corporations to fund their pension plans with current earnings. "…”

Section: The Introduction Of DC and New Db Plans In Japanmentioning

confidence: 99%

Strengthening Employment-Based Pensions in Japan

Mitchell

Clark

2002

SSRN Journal

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We investigate how the Japanese pension market for funded employment-based pensions is changing and how it might be strengthened in order to better serve one of the most rapidly aging populations in the world. Public and private pensions in Japan are estimated to hold around US$3 trillion, making that system the second largest globally after the United States. However, unfavorable economic developments have cut sharply cut into asset values, and the weak economy is undermining traditional lifetime employment contracts. Recent legislation permitting the establishment of defined contribution plans in Japan may provide new employer-sponsored retirement plan opportunities. We first describe the Japanese pension system at the end of the 20th century and provide an overview and evaluation of the changes in the pension arena emerging from the 2001 legislation. Next we show that important design questions remain to be answered, if Japanese employment-based pensions are to be reformed and modernized. Finally we indicate lessons gleaned from recent changes in US pension plans.The Japanese population is aging more rapidly than any other, and very low fertility rates going forward mean that this nation's population will start shrinking within the next few years. 1 International retirement system experts would do well to examine developments in Japanese retirement policies, so as to assess how employer-sponsored pensions fare in such a rapidly aging society. Demographic change in Japan also places pressure on plan sponsors to efficiently manage pension funds and to offer costeffective pensions that workers value. Government policymakers must monitor and revise natio nal pension systems and develop appropriate regulations and tax policies for employer pension plans.Coordination of public and private retirement programs will be essential in the coming decades.Two important questions are addressed in the present analysis: how is the Japanese pension market for funded employment-based pensions evolving, and what additional steps are needed to strengthen public and private retirement plans? The Japanese pension system is one of the largest in the world, second only to that of the United States pension market. Institutional public and employer pension assets in Japan have been estimated to be around US$3 trillion (Conrad 2001;Cerulli 1999), of which some US$0.6 trillion are in private plans (Sakamoto, 2001). But economic news has not been favorable for Japanese pension plans of late. Financial stagnation has sharply reduced asset values, lowered returns on bonds and other fixed income assets, and raised unemployment rates. 2 In addition, the weak economy 1 Japan is currently the most rapidly aging country in the world. This aging reflects a very low total fertility rate of approximately 1.3, and high life expectancy of 77 years for men and 84 years for women. Projections indicate that the proportion of the population aged 65 and older will increase from about 15% in 1995 to 27% by 2025 and the absolute size of the Japanese populati...

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The "Big Bang"? An Ambivalent Japan Deregulates Its Financial Markets

Cited by 18 publications

References 0 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

Banking Crises and 'Japanization': Origins and Implications

Strengthening Employment-Based Pensions in Japan

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