1. PRE-IFRS development factors, cultural dimensions and accounting values of Japan and China
The following four main PRE-IFRS development factors have the biggest impact on international business accounting practices: source of finance, legal system, taxation system and political and economic ties (Meek & Saudagaran, 1990). Once you know a nation’s PRE-IFRS developmental factors, particularly Source of Finance, then you are able to predict the cultural dimensions that will be in place as they are all linked. This means that Hofstede’s cultural dimensions and Gray’s accounting values represent national values in a PRE-IFRS environment.
We can thus predict the Japan and China’s cultural dimensions and accounting values from the following PRE-IFRS …show more content…
But slowly allowing outside shareholders’ funds Equity-Shareholders Banks (Mostly State-Owned Enterprises) Banks (Private/Family Owned)
Legal System Civil ‘Code’
German influence Civil
Government is a key regulator of the accounting system Common Civil ‘Code’ Civil ‘Code’
Taxation Conformity to financial statement One set of accounting reports Separate Tax to Accounting Profit Conformity to financial statement Mexican GAAP and FRS compliance
Political and Economic Ties Influence from Europe and US Influence from the Soviet-style accounting system Commonwealth EU NAFTA/US
Sources: (Borker, 2012; Doupnik & Perera, 2015; Taylor, 2016)
Because of these PRE-IFRS Developmental Factors, we can theorize that the Japan and China have the following cultural dimensions as compared to the previous nations we have covered:
Cultural Dimensions for Japan and China:
Cultural Dimension Japan China UK Germany Mexico
Power Distance (PDI) High High Moderately Low Moderately Low High
Individualism (IDV) Low Low High Medium-High Low
Masculinity (MAS) Medium Medium Medium - High Medium-High Medium-High
Uncertainty Avoidance (UAI) Low-Medium Low-Medium Low Medium-High High
Long-Term Orientation (LTO) High High Low to Moderate …show more content…
279 - 280; Hinks, 2013; Taylor, 2016).
Accounting Regulation:
There are differences between the Japanese accounting profession and its counterparts in Anglo-American countries, including.
• Ministry of Finance plays a major role in developing financial reporting standards in Japan and the influence of the Japanese Institute of Certified Professional Accountants (JICPA) in this respect has been minor compared to in Anglo-American countries.
• Due to German influence in Japan’s accounting regulation, financial reporting is heavily influenced by the Japanese government through the commercial code and corporate income tax law. o Also similarly to Germany, creditor orientation and accounting rules are closely tied to tax rules.
• Recent attempts have been made to try and ensure that Japanese accounting standards fit international standards o Big Bang financial reforms are helping harmonise with international standards o ASBJ and IASB agreed to launch a joint project to reduce differences between IFRS and Japanese
The following four main PRE-IFRS development factors have the biggest impact on international business accounting practices: source of finance, legal system, taxation system and political and economic ties (Meek & Saudagaran, 1990). Once you know a nation’s PRE-IFRS developmental factors, particularly Source of Finance, then you are able to predict the cultural dimensions that will be in place as they are all linked. This means that Hofstede’s cultural dimensions and Gray’s accounting values represent national values in a PRE-IFRS environment.
We can thus predict the Japan and China’s cultural dimensions and accounting values from the following PRE-IFRS …show more content…
But slowly allowing outside shareholders’ funds Equity-Shareholders Banks (Mostly State-Owned Enterprises) Banks (Private/Family Owned)
Legal System Civil ‘Code’
German influence Civil
Government is a key regulator of the accounting system Common Civil ‘Code’ Civil ‘Code’
Taxation Conformity to financial statement One set of accounting reports Separate Tax to Accounting Profit Conformity to financial statement Mexican GAAP and FRS compliance
Political and Economic Ties Influence from Europe and US Influence from the Soviet-style accounting system Commonwealth EU NAFTA/US
Sources: (Borker, 2012; Doupnik & Perera, 2015; Taylor, 2016)
Because of these PRE-IFRS Developmental Factors, we can theorize that the Japan and China have the following cultural dimensions as compared to the previous nations we have covered:
Cultural Dimensions for Japan and China:
Cultural Dimension Japan China UK Germany Mexico
Power Distance (PDI) High High Moderately Low Moderately Low High
Individualism (IDV) Low Low High Medium-High Low
Masculinity (MAS) Medium Medium Medium - High Medium-High Medium-High
Uncertainty Avoidance (UAI) Low-Medium Low-Medium Low Medium-High High
Long-Term Orientation (LTO) High High Low to Moderate …show more content…
279 - 280; Hinks, 2013; Taylor, 2016).
Accounting Regulation:
There are differences between the Japanese accounting profession and its counterparts in Anglo-American countries, including.
• Ministry of Finance plays a major role in developing financial reporting standards in Japan and the influence of the Japanese Institute of Certified Professional Accountants (JICPA) in this respect has been minor compared to in Anglo-American countries.
• Due to German influence in Japan’s accounting regulation, financial reporting is heavily influenced by the Japanese government through the commercial code and corporate income tax law. o Also similarly to Germany, creditor orientation and accounting rules are closely tied to tax rules.
• Recent attempts have been made to try and ensure that Japanese accounting standards fit international standards o Big Bang financial reforms are helping harmonise with international standards o ASBJ and IASB agreed to launch a joint project to reduce differences between IFRS and Japanese