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IFRS Adoption and Accounting Conservatism of Japanese Firms with Governance System Transition

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  • Konosuke Shimamoto

    (University of Tokyo)

  • Fumiko Takeda

    (University of Tokyo)

Abstract

This study examines whether there is a difference in the degree of accounting conservatism between firms that voluntarily adopt International Financial Reporting Standards (IFRS) and those that use local accounting standards in Japan, being a traditional code-law country that is undergoing changes in its governance system. The difference-in-difference approach reveals that the degree of conditional conservatism decreases for IFRS adopters and more sharply for Japanese accounting standards’ users between 2009/2010 and 2018/2019, resulting in relatively larger conditional conservatism for IFRS adopters. The regression analysis shows that the change in conditional conservatism is positively associated with IFRS adopters having a high foreign shareholders ratio. This study makes several contributions to the related literature. First, to the best of our knowledge, this study is the first to provide a comparative analysis of IFRS and Japanese accounting standards with respect to conservatism. Second, additional evidence is provided on the relationship between conservatism and corporate governance.

Suggested Citation

  • Konosuke Shimamoto & Fumiko Takeda, 2020. "IFRS Adoption and Accounting Conservatism of Japanese Firms with Governance System Transition," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 26(2), pages 161-173, May.
    • Handle: RePEc:kap:iaecre:v:26:y:2020:i:2:d:10.1007_s11294-020-09788-y
    DOI: 10.1007/s11294-020-09788-y
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    References listed on IDEAS

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    Cited by:

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    2. Wenjun Kuang, 2023. "Accounting comparability and the accuracy of management earnings forecasts in Japan," Discussion Papers in Economics and Business 23-07, Osaka University, Graduate School of Economics.

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    More about this item

    Keywords

    Voluntary IFRS adoption; Conservatism; Japan; Corporate governance;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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