International accounting standards. Future adoption of IFRSs in Japan and the Japanese accounting system

Abstract

Background and problem: With the globalization of financial and capital markets, the internationalization of accounting standards has inevitably become a trend. Over time Japanese accounting standards have been harmonized and converged towards IFRSs. The remaining question at the moment is whether Japan should adopt IFRSs or not. Aim: To depict and analyze the developments in Japanese accounting standards in order to evaluate the potential direction of Japanese accounting standards in near future and assess any changes among Japanese business environment in a practical context in relation to IFRSs. Limitation: The scope of this thesis is to perceive the developments in Japanese accounting standards in a more general context such as accounting traditions and historical causes etc, without any further comparison between the Japanese GAAP and IFRSs in details. Methodology: Two interviews with Japanese professors have been performed. The empirical material has been analyzed on the basis of the theoretical framework regarding the background and development of Japanese accounting standards in relation to the internationalization of accounting standards. Result and conclusion: The adoption of IFRSs is assessed to be finalized in Japan in very near future, based on the analysis of the postmodern history of Japanese accounting and the accounting situation in Japan. Concerning potential effects of IFRSs in relation to a series of factors such as Japanese market infrastructure and business environment, Japan is suggested to carefully choose a proper adoption approach while implementing IFRSs. Recommendation for further research: A similar study would be conducted about few years from now in order to obtain a more accurate and deep insight into the impact of IFRSs on both Japanese accounting standards and companies. Another study group such as accounting companies could contribute a new perception on the issue from different perspective.