week 10-Japan.pdf - ACCG835 International Accounting 2008...

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ACCG835 International Accounting
2008 Semester 2
Financial reporting in selected countries
Japan and China
© Copyright 2008, unauthorized reproduction or transmission
is prohibited by Macquarie University.
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Assigning values to Hofstede’s data
80 Short 29 Short/Long
95
High
62 Masculinity
92 Low 46 Uncertainty
46 High 91 Individuality
54 Low 40 Power
To make the Gray model workable, we must assign the Hofstede
data to a high or low value.
(Note: the five scales
do not have the same ranges or averages.)
USA JAPAN

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LINKING SOCIETAL and ACCOUNTING VALUES: Japan actuals
Accounting
Values PD IDV UAI MASC LTO
Professional
v
Statutory
Control
Uniformity
v
Flexibility
Conservatism
v
Optimism
Secrecy
v
Transparency
54 46 92 95 Long
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Summary of theoretical prediction for
Japan
The model does not seem as strong as for the USA.
We do not have 100% correlation of the cells, but the
relationships still seem strong enough to predict the
following:
We expect to find –
statutory control model of authority and enforcement,
uniformity in accounting techniques.
conservative values for assets and profits.
secrecy in information disclosure.
Seems to be a problem with the masculinity variable,
which needs to be explained.

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Culture & Business Environment
Traditional society.
Interdependence of group and individual.
Personal relationships important.
Powerful families and stable companies.
Importance of banks. High degree of debt finance.
Lower importance of shareholders.
Business culture a mixture of domestic and foreign.
German and US influential.
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Players
Ministry of Justice (MoJ):
Regulates Commercial Code, applies to all
companies (about 1 million).
Requirement for annual reporting.
Audit requirement for large companies.
Compare with USA, Japan has more
uniformity.
Large, listed companies also report to MoF,
i.e. have duplicate reporting requirements.

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Players
Ministry of Finance (MoF) most powerful
player.
Financial influence over whole economy.
Regulates Securities Exchange (SE) Law,
applies to 1800 listed companies.
Similar to US SEC disclosure and auditing
laws, but less content.
Tax bureau and tax law are central to
accounting.
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Players
JICPA, professional body:
small (13,000 members), weak influence.
Regulated by MOF.
Activities restricted to audit and tax.
Not popular with companies.
Auditors tend not to question accounts too much.
Top company executives not usually accountants nor
members of JICPA.
Business Accounting Deliberation Council, gives
accounting standard advice.
Accounting Standards Board of Japan, new player, gives
advice on policy formulation.

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Historical perspective – Zaibatsu
Corporate industrial form came to Japan in 1899.
Tradition, family, obligation, hierarchy still dominant.
Zaibatsu - powerful holding companies,
held direct interests in subsidiaries,
came to control much of industry.