IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this article

The Case for Economic and Accounting Dualism: Towards Reconciling the Japanese Accounting System with the Global Trend of Fair Value Accounting

Listed author(s):
  • Tsunogaya Noriyuki

    (Kyushu University)

  • Okada Hiromasa

    (Nagasaki University)

  • Patel Chris

    (Macquarie University)

Registered author(s):

    Over the last thirty years in particular, a number of papers have examined various issues concerning the Japanese accounting system. However, previous research has largely ignored the importance of Japanese contextual factors. As such, the objective of this paper is to develop a holistic theoretical contextual framework for examining the Japanized process of convergence, which aims at integrating the Japanese-specific accounting system with the Anglo-American model, thereby achieving de facto (actual) convergence. This framework includes three heterogeneous genealogies, namely, Accounting Monism, Economic Monism, and Economic and Accounting Dualism, and four contextual dimensions, including legal, historical, political, and economic environments. The results show that because Japan has both globalized large-scale capital markets and well-organized related infrastructures, which include financial systems, governance structures, related laws, auditing standards, and standards-setting bodies, it would be futile to adopt International Financial Reporting Standards (IFRS) without reforming these and related facilities and resources. The findings also show that Economic and Accounting Dualism aims at reconciling heterogeneous concepts in accounting practices, such as future and past measurement attributes, asset-liability and revenue-expense based income, ex ante and ex post income calculation, and information providing role and reconciliation role of financial reporting. Excessive emphasis on Economic Monism and fair value disregards the fact that Japan is undergoing a prolonged, complex, and controversial process for aligning its entire accounting system with IFRS. Importantly, the partial suspension of fair value measurement and the swing-back towards historical cost measurement caused by the recent global financial crisis revealed that fair value is not unconditionally fair. We suggest that social, historical, political, and economic factors cannot be ignored in this rush towards global convergence of financial reporting. We further argue that accounting research can be enhanced by examining the contextual factors in which the uniqueness of accounting system is embedded.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: Download restriction for institutions: For access to full text, subscription to the journal is required. Individual readers who register with De Gruyter Online get free access.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Article provided by De Gruyter in its journal Accounting, Economics, and Law.

    Volume (Year): 1 (2011)
    Issue (Month): 2 (October)
    Pages: 1-56

    in new window

    Handle: RePEc:bpj:aelcon:v:1:y:2011:i:2:n:5
    Contact details of provider: Web page:

    Order Information: Web:

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

    in new window

    1. Biondi Yuri, 2011. "The Pure Logic of Accounting: A Critique of the Fair Value Revolution," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 1(1), pages 1-49, January.
    2. Yuri Biondi & Antoine Rebérioux, 2008. "The governance of intangibles: Rethinking financial reporting and the Board of directors," EconomiX Working Papers 2008-36, University of Paris Nanterre, EconomiX.
    3. Richard Baker & Yuri Biondi & Qiushong Zhang, 2010. "Disharmony in international accounting standards setting: The Chinese approach to accounting for business combinations," Post-Print hal-00565498, HAL.
    4. Doupnik, Timothy S. & Riccio, Edson Luiz, 2006. "The influence of conservatism and secrecy on the interpretation of verbal probability expressions in the Anglo and Latin cultural areas," The International Journal of Accounting, Elsevier, vol. 41(3), pages 237-261.
    5. Michael Bromwich & Richard Macve & Shyam Sunder, 2010. "Hicksian Income in the Conceptual Framework," Abacus, Accounting Foundation, University of Sydney, vol. 46(3), pages 348-376.
    6. Robert Boyer, 2007. "Assessing the impact of fair value upon financial crises," Post-Print hal-00812978, HAL.
    7. Ijiri, Yuji, 2005. "US accounting standards and their environment: A dualistic study of their 75-years of transition," Journal of Accounting and Public Policy, Elsevier, vol. 24(4), pages 255-279.
    8. Doupnik, Timothy S. & Richter, Martin, 2003. "Interpretation of uncertainty expressions: a cross-national study," Accounting, Organizations and Society, Elsevier, vol. 28(1), pages 15-35, January.
    9. Yuri Biondi & Tomo Suzuki, 2007. "Socio-Economic impacts of international accounting standards : an introduction," Post-Print halshs-00258291, HAL.
    10. Jiang, Li & Kim, Jeong-Bon, 2000. "Cross-Corporate ownership, information asymmetry and the usefulness of accounting performance measures in Japan," The International Journal of Accounting, Elsevier, vol. 35(1), pages 85-98, March.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:bpj:aelcon:v:1:y:2011:i:2:n:5. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.