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Transitioning to IFRS in Japan: Corporate Perceptions of Costs and Benefits

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  • Chikako Ozu
  • Miho Nakamura
  • Kyoko Nagata
  • Sidney J. Gray

Abstract

This paper examines the ongoing transition to International Financial Reporting Standards (IFRS) in Japan with a particular focus on recent institutional developments and corporate concerns. While Japan has committed to the convergence of Japanese generally accepted accounting principles (J†GAAP) with IFRS it has not as yet formally adopted IFRS. This paper reports on Japanese corporate perceptions of the likely costs and benefits of adopting and implementing IFRS using survey data collected from senior financial executives of 292 Japanese listed companies in 2013–14. Our findings reveal that Japanese companies identify a number of major areas of general concern with the adoption and implementation of IFRS. Most importantly, uncertainty regarding the interpretation of standards followed by staff training, IT systems, technical knowledge and differences between J†GAAP and IFRS were reported as major concerns. Our survey also highlights that revenue recognition, depreciation, consolidated financial statements, financial statement presentation and the retrospective application of IFRS were viewed as key IFRS accounting issues. While the large majority of companies expected a moderate degree of benefits to arise from IFRS, substantial benefits were perceived more likely to apply to large and overseas listed companies mainly arising from improvements in the international comparability of financial statements.

Suggested Citation

  • Chikako Ozu & Miho Nakamura & Kyoko Nagata & Sidney J. Gray, 2018. "Transitioning to IFRS in Japan: Corporate Perceptions of Costs and Benefits," Australian Accounting Review, CPA Australia, vol. 28(1), pages 4-13, March.
    • Handle: RePEc:bla:ausact:v:28:y:2018:i:1:p:4-13
    DOI: 10.1111/auar.12168
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    References listed on IDEAS

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    1. Benston, George J. & Bromwich, Michael & Litan, Robert E. & Wagenhofer, Alfred, 2006. "Worldwide Financial Reporting: The Development and Future of Accounting Standards," OUP Catalogue, Oxford University Press, number 9780195305838.
    2. Stewart Jones & Alison D. Higgins, 2006. "Australia's switch to international financial reporting standards: a perspective from account preparers," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 46(4), pages 629-652, December.
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    Cited by:

    1. Cynthia W. Cai & Martina K. Linnenluecke & Mauricio Marrone & Abhay K. Singh, 2019. "Machine Learning and Expert Judgement: Analyzing Emerging Topics in Accounting and Finance Research in the Asia–Pacific," Abacus, Accounting Foundation, University of Sydney, vol. 55(4), pages 709-733, December.
    2. Jude Edeigba & Christopher Gan & Felix Amenkhienan, 2020. "The influence of cultural diversity on the convergence of IFRS: evidence from Nigeria IFRS implementation," Review of Quantitative Finance and Accounting, Springer, vol. 55(1), pages 105-121, July.

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