|KOGA Chitoshi (Faculty Fellow, RIETI / Doshisha University) /KAGAYA Tetsuyuki (Hitotsubashi University) /MUKAI Ichiro (Aichi Gakuin University) /URASAKI Naohiro (Kinki University) /UMEHARA Hidetsugu (Cyuo University)
|March 2011 11-J-013
|Research Project on the Design for the Optimum Disclosure System
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In applying International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS), a disclosure system that consists of four complementary subsystems such as financial information, nonfinancial information, internal control, and auditing subsystems should be designed to match both the business structure of Japan and actual behavior of Japanese enterprises. This paper first discusses the influence of the application of IFRS on Japanese enterprises from two aspects: the external aspects, namely, the accounting environment surrounding Japanese enterprises, and internal aspects, namely, the calculation of profits and the disclosure issues inside enterprises. Second, this paper points out the necessity of designing an effective disclosure system based on the complementary relationship between financial information, nonfinancial information, internal control, and auditing subsystems. This disclosure system needs to take into consideration the characteristics of Japanese-style business, which attaches great importance to maintaining long-term and stable relationships. This paper also testifies that the convergence with IFRS in Japan does not necessarily lead to an improvement in value relevance of accounting information. On the other hand, accounting treatments that can improve the transparency of income information are increasingly demanded. Lastly, based on the aforementioned theoretical and empirical research results, this paper outlines the way in which IFRS should be introduced in order to contribute to the sustainable development of Japanese enterprises.