Framework and Overview

This chapter explains the background, motive, and analytical framework as well as the underlying notion adopted in this book. Convergence to International Financial Reporting Standards (IFRS) is one of the most controversial issues and is the subject of increasing interest in both accounting research and practice. Despite the push toward convergence, accounting systems in individual countries remain deeply intertwined with their unique institutions, such as corporate and economic systems and legal practice, i.e., “enforcement.” As a result, for each country, an individual mix of global and local factors determines the economic consequences or relevance of accounting standards convergence. Based on the evidence of economic consequences this book intends to provide empirical implications for a global accounting standards setting. A further dimension is explored in the volume. Despite the globalization of accounting standards, each country continues to have its own corporate disclosure systems or regulations, regardless of whether they are mandatory or voluntary, because securities administration systems and corporate governance standards lack convergence or a common model like IFRS. We make attempts to identify the inherent characteristics of disclosure behavior by Japanese firms and empirically diagnose its effects on corporate behavior and capital market in terms of enforcement unique to Japan.