Japanese
ACCOUNTING FORUM 2014

No. 22

JAPAN ACCOUNTING ASSOCIATION

Japan Accounting Association
Liaison Office: Hayashi Building, 1-10 Kanda Nishiki-cho, Chiyoda-ku,
Tokyo 101-0054, Japan

Copyright© 2014, Japan Accounting Association

Japanese ACCOUNTING FORUM 2014
JAPAN ACCOUNTING ASSOCIATION

Preface
Japanese ACCOUNTING FORUM of Japan Accounting Association (JAA) is
published annually to publicize academic activities of JAA in English. The first issue
of Japanese ACCOUNTING FORUM was published in 1993. This edition for 2014is the 22nd issue of Japanese ACCOUNTING FORUM.
This issue contains the summary of presentations at the 72nd Annual Conferenceof JAA which was hosted by Chubu University in Aichi Prefecture on September
3-6, 2013. It also includes the reports of regional activities of JAA during the 2013
academic year.
I sincerely hope that Japanese ACCOUNTING FORUM serves the readers tobetter understand the activities of JAA.
Yoshihiro Tokuga
Chairman of the International Committee andManaging Editor of Japanese ACCOUNTING FORUM,
Japan Accounting Association

Contact: Professor Yoshihiro Tokuga
Graduate School of Management
Kyoto University
Yoshida Honmachi, Sakyo-ku,
Kyoto 606-8501, JAPAN
tokuga@econ.kyoto-u.ac.jp

1

JAPAN ACCOUNTING ASSOCIATION
Board of Directors (2014)

President:
Kunio Ito,

Hitotsubashi University

Directors:
Koji Ishiuchi, Japan University of Economics
Shigeo Ohtsuka, Chiba University
Hiroshi Obata, Hitotsubashi Unversity
Akitomo Kajiura, Kwansei Gakuin University
Teruyuki Kawasaki, Konan University
Keiko Kitamura, Chuo University
Kouji Kurata, Rikkyo University
Shinya Saitou, Yokohama National University
Hisakatsu Sakurai, Kobe University
Nobuhiko Sato, Kumamoto Gakuen University
Kenji Shiba, Kansai University
Yoshihiro Tokuga, Kyoto University
Fumio Naito, Konan University
Kazuo Hiramatsu, Kwansei Gakuin University
Yoshikuni Hirose, Waseda University
Shuji Mizoguti, Yokohama National University2

Japanese ACCOUNTING FORUM 2014

International Committee and 2013-2014 Editorial Board
Managing Editor:
Yoshihiro Tokuga,

Kyoto University

Deputy Managing Editor:
Nobuhiko Sato, Kumamoto Gakuen University
Editors:
Noriyuki Konishi, Aoyama Gakuin University
Chika Saka, Kwansei Gakuin University
Tokuei Sugimoto, Kwansei Gakuin University
Tomomi Shiosaki, Kyushu University
Noriyuki Tsunogaya, Nagoya University
Makoto Nakano, Hitotsubashi University
Akihiro Noguchi, Nagoya University

3

Past Editors of the Japanese ACCOUNTING FORUM :1993 － 1997
Seigo Nakajima, Managing Editor, Ferris University
Yukio Fujita, Deputy Managing Editor, Aichi Gakuin University
Youichi Hara, Ritsumeikan University
Kazuo Hiramatsu, Kwansei Gakuin University
Toshiro Hiromoto, Hitotsubashi University
Yoshiaki Jinnai, Tokyo Keizai University
Yoshihide Toba, Senshu University

1998 – 2000
Nobuo Kamata, Managing Editor, Chubu University
Kazuo Hiramatsu, Deputy Managing Editor, Kwansei Gakuin University
Tokugoro Murayama, Deputy Managing Editor, CPA
Shinji Hatta, Surugadai University
Akihiro Noguchi, Nagoya University
Yasuhito Ozawa, Senshu University
Shigeto Sasaki, Senshu University
Kazumasa Takemori, Chubu University

2001 – 2003
Nobuo Kamata, Managing Editor, Chubu University
Kazuo Hiramatsu, Deputy Managing Editor, Kwansei Gakuin University
Shinji Hatta, Surugadai University
Norio Igarashi, CPA
Noriyuki Konishi, Senshu University
Akihiro Noguchi, Nagoya University
Michimasa Satoh, Nagoya University
Kazumasa Takemori, Chubu University

2004 – 2006
Michiharu Sakurai, Managing Editor, Senshu University
Kazuo Hiramatsu, Deputy Managing Editor, Kwansei Gakuin University
Yukio Sakaguchi, Senshu University
Hironao Iwata, Tokyo International University
4

Past Editors of the Japanese ACCOUNTING FORUM :2007 – 2009
Kazuo Hiramatsu, Managing Editor, Kwansei Gakuin University
Noriyuki Konishi, Deputy Managing Editor, Okayama University
Akihiro Noguchi, Nagoya University
Norio Sawabe, Kyoto University
Takashi Yaekura, Hosei University
Koji Kojima, Kwansei Gakuin University

2010 – 2012
Yoshihiro Tokuga, Managing Editor, Kyoto University
Nobuhiko Sato, Deputy Managing Editor, Meiji University
Koji Kojima, Kwansei Gakuin University
Noriyuki Konishi, Aoyama Gakuin University
Akihiro Noguchi, Nagoya University
Norio Sawabe, Kyoto University

5

JAPAN ACCOUNTING ASSOCIATION

Japanese
ACCOUNTING FORUM
No. 22, 2014
CONTENTS
Preface

Yoshihiro Tokuga

Report2013 Annual Conference(1)

Takahide Sawamura (9)Plenary Session: Seeking of Accounting Innovation
Session 1: Retrospect and Prospect of Innovation in Financial Accounting
Seeds of Innovation in an Empirical Accounting Research: Japan-U.S.
Comparison of Earnings Quality from Management Perspectives
Tetsuyuki Kagaya(11)

The Usefulness of Historical and Forecast Accounting Information in Firm
Valuation
Koji Ota (12)Implication of Controversies over Assets and Liabilities View: Cost Analysis ofFair Value and Historical Cost Measurements
Yoshinori Kawamura (13)An Historical Analysis on Accounting Recognition of Executory Contracts
Nobuhiko Sato

(14)

Session 2: An Inquiry into Innovations in Management Accounting Researchand Practice
Innovation Process of Management Accounting in the U.S. Federal Government
Masafumi Fujino (15)6Management Accounting Innovation Associated with Advancing EnterpriseGroup Management
Tomoaki Sonoda (17)Importance of Management Accounting Research on Integrated Reporting
Kazunori Ito (18)The Innovation of Management Accounting in China
Ichiro Mizuno(19)

Makoto Nakano(20)

Session 3: Innovation of Auditing and Accounting Study
Innovation in Accounting Research

Perspectives on Power Law Distribution and Extension to Nonlinear Model
Manabu Sakaue (21)Innovative Challenge to Risk Based Audit Approach
Kyoko Miyamoto(22)

What is the Innovative Research in Accounting Profession?
Hiroshi Taki

(23)

Accounting Policy and Earnings Management by the Management
Masao Tsuji(24)

Special Committees

A Study on Research Methods towards a Contemporary Issue in Auditing
Terumi Takita (25)

Subject Research Committee
Transformation of Public Management and the Functions of the Accountancy
Kenji Shiba (26)7Study Groups:
A Study on Accounting Theory Construction by Theory Research
Kiyotaka Ueno

(28)

A Study on Disclosure and Assurance of Risk Information－Toward Integrated Reporting－
Noriyuki Konishi(30)

Chubu Session: Great Transformation of Accounting
Innovation in Financial Statement Presentation
Nobuo Kamata(32)

Possibility of New Accounting Model for Stakeholder Capitalism－Innovations from Funds Theory of Accounting－Michimasa Satoh(33)

International(35)

Session:Regional Reports
Hokkaido Region

Koichiro Matsumoto(36)

Tohoku Region

Masahiro Shiseki(37)

Kanto Region

Ryuichi Nakajima(38)

Chubu Region

Akihiro Noguchi(39)

Kansai Region

Tae-Young Park

(40)

Kyushu Region

Keiichi Oishi

(41)

8

2013 Annual Conference of JAA
Report2013 Annual Conference
Chairman of 2013
Annual Conference

Takahide Sawamura
Chubu University
The 72nd Annual Conference of the Japan Accounting Association (JAA) was
held over three days, from September 4 (Wed.) to September 6 (Fri.), 2013. The
Nagoya Tokyu Hotel hosted the first day, September 4, while Chubu University
Kasugai Campus hosted the remaining two days, September 5 and 6. Afterconsideration by Program Committee Chair Kazuo Hiramatsu and professors on the
program committee, the overall theme of the conference was set as “Seeking of
Accounting Innovation.”
This was the first time in 42 years, since the 30th Annual Conference convened at
Nagoya University in 1971, that the Annual Conference has been held in this region.
This is because we thought it is necessary, in the current period of global economic
and social upheaval, to return to the basics of accounting and create accounting that
conforms to a new era. We established three venues with Plenary sessions based on
this theme. At these venues, we looked deeper into the study of accountancy as asocial science while probing innovation from various viewpoints, such as
globalization, diversification, and interdisciplinary aspects with a frank exchange of
opinions.
Following the Council and General Assembly of Membership on the first day ofthe conference (September 4, Wed.), there were presentations of the Subject
Research Committee Report (Report 1) and of the Special Committee Reports(Report 2), followed by a special speech by the IAESB Chair Peter Wolnizer. We
also held a welcome reception at the Nagoya Tokyu Hotel that evening.
Beginning on the second day (September 5, Thu.), the conference was held at
Chubu University Kasugai Campus, where there were 45 free topic presentations,two presentations in the English session, seven presentations in the graduate student
session, and four presentations from the Korean Accounting Association (KAA) andthe Taiwan Accounting Association (TAA) in the International session. Furthermore,
there were two presentations in the Study Group Report, followed by presentations
on the Plenary sessions at three venues (four presentations at each).
On the third day (September 6, Fri.), there were 39 free topic presentations, 129presentations in the graduate student session, and two presentations at the Chubu
Session chaired by Nobuo Kamata with a debate by three panelists. The discussion
regarding the Plenary sessions was separated into Venue 1, Venue 2, and Venue 3.
There were subsequent presentations and debates from the three speakers at the IFRS
Session moderated by Ikuo Nishikawa.
The content of the 72nd Annual Conference was approved by the Program
Committee. The enormous support of the members, general participants, program
members, study group leaders, and officials of the academic society resulted in a
successful conference of more than 800 attendees. I would like to express mygratitude to everyone who helped bring about such a successful conference.
The schedule for the 2013 Annual Conference was as follows:
Date and Time
Sept. 3 13:00－15:00
15:00－17:30
Sept. 4 10:00－12:00

EventsScreening Committee for Awards
Meeting of Board of Directors
Meeting of Council

12:30－14:00

General Assembly of Membership

14:15－14:55

Subject Research Committee Report

15:00－16:25

Special Committee Reports

16:45－17:45

Special Speech“Revisions of IESs—Implication and Opportunities for
University Education”

Sept. 5

9:30－11:50

International Session

9:30－11:50

Concurrent Sessions

12:45－14:10

Study Group Reports

14:30－16:30

Plenary Sessions—Presentation“Seeking of Accounting Innovation”

Sept. 6

9:30－11:50

Chubu Session

9:30－11:50

Concurrent Sessions

12:45－14:30

Plenary Sessions—Discussion“Seeking of Accounting Innovation”

14:45－17:00

IFRS Session10

2013 Annual Conference of JAA
Plenary Session: Seeking of Accounting Innovation
Session 1: Retrospect and Prospect of Innovation in
Financial Accounting
Seeds of Innovation in an Empirical Accounting Research:
Japan-U.S. Comparison of Earnings Quality From Management
Perspectives
Tetsuyuki Kagaya
Hitotubashi University
The purpose of this study is to examine why the relevance of accounting studies
has been lost in the past decades and how we should conduct the research in the
future to recover the innovation in empirical accounting fields. In particular, I focus
on the topic, “What are the real economic roles of financial accounting?,” which isan unanswered question in accounting. I analyze the differences between CFOs’
views of earnings quality in the U.S. and Japan to examine it, because earnings
quality is closely related to economic roles of financial accounting.
Earnings quality depends on what objectives financial information users have andwho these users are. I make a conjecture that in the U.S. accounting system it isassumed that accounting information, especially earnings information, is mainly forinvestors, and usefulness for investors’ decision-making is the most important factor
in considering earnings quality because accounting information can contribute toimprovement of discipline from the capital market. On the other hand, I speculatethat in the Japanese accounting system it is assumed that accounting information is
not only for investors, but also for other stakeholders for long-term relationships ortransactions. It is difficult for firms to meet all the needs of accounting informationfrom multiple stakeholders; therefore, they shed light mainly on stewardship. I show
some evidence which support my conjectures. Firstly, U.S. firms put more emphasison earnings information in normal situations than Japanese firms, therefore theirmotivations for managing earnings are stronger. In particular, executive
compensation or subsequent career for top managers may promote earnings
management. Secondly, U.S. firms shed more light on future-oriented, transparent,
and neutral information, meanwhile Japanese firms focus more on persistent andprudent earnings. Thirdly, U.S. CFOs tend to believe that management professional
judgment could improve earnings quality; meanwhile Japanese CFOs tend to thinkthat detailed guidelines or rules improve it. Fourthly, U.S CFOs believe that capital
market players and corporate governance, designed by perspectives for improving
the disciplines from capital market, improve earnings quality, but Japanese CFOs
don’t believe so. These facts suggest that the differences between the U.S. and Japandepend on whether a country puts more emphasis on a market-based corporate
system or relation-based corporate system. We have much opportunity to develop
innovative research in Japan from relation-based accounting system.
11

The Usefulness of Historical and Forecast
Accounting Information in Firm Valuation
Koji Ota
Kansai University

As a market-based accounting researcher, I have always felt that forecast
information is much more important than historical information in the stock market.
After all, it is investors’ perception of the future prospects of firms that moves themarket, not a bunch of stale information contained in financial statements. This view
is substantiated by a large body of academic research that investigates thedecision-making usefulness of accountings information from the information
perspective. It presents strong evidence that historical accounting information is ofquite limited use in the presence of forecast information.
The usefulness of accounting information, however, cannot be determined fromthe information perspective alone. There is another approach to it, which is themeasurement perspective. This motivated me to investigate the usefulness ofhistorical and forecast accounting information from the measurement perspective.
I make use of three well-known accounting-based valuation models, namely the
Ohlson model, the Feltham-Ohlson model, and the Ohlson-Juettner model, andcompare the relative ability of the competing valuation models to explain
contemporaneous stock prices and to predict future stock returns. The empiricalresults show that the valuation model that uses both historical and forecast
accounting information exhibits the best performance in both aspects, followed by
the model that uses only historical information, and lastly, the model with forecast
information alone. This implies that the stock market impounds both historical andforecast accounting information into share prices.
The findings are encouraging for academic accountants. Because there is notmuch we can do to improve the usefulness of forecast information, but there is someroom left for us to enhance the usefulness of historical accounting information thatis founded on the current accounting system. Perhaps, it is our duty to help improvethe current accounting system towards the one that serves the investors to makemore well-informed decisions.

12Implication of Controversies over Assets and Liabilities View:
Cost Analysis of Fair Value and Historical Cost Measurements
Yoshinori Kawamura
Waseda University
Since the U.S. Financial Accounting Standards Board issued its Discussion
Memorandum on elements of financial statements in 1976, accounting standard
setters have developed accounting standards based on the trade-off between theassets and liabilities view and the revenues and expenses view.
In this article, I developed an analytical framework based on the theory for firm
valuation, which generally holds that a firm value can be assessed by the book value
and the future abnormal income even though not all assets and liabilities arerecognized on the balance sheet and measured at fair value. The framework revealed
that a firm has an incentive to minimize its reporting cost by adopting the mixed
attribute model, where fair value measurements and historical cost measurements
are selectively used.
I found that a firm’s incentive to minimize the reporting cost would justify
adopting the mixed attribute model, provided that the users are able to evaluate thefirm value regardless of the firm’s accounting policies. Next, I extend the model toincorporate the user’s benefits from disclosure of fair value measurements. In thiscase, the scope of the fair value measurements would likely to widened, but still
there should remain the scope of historical cost measurements and the full fair value
accounting is unlikely to be justified unless certain rare conditions are met.
Furthermore, I extend the model to identify two recognition criteria where twodifferent sets of measurements are disclosed. From this extension, I obtained
implications over the issues of simultaneous disclosure of net income andcomprehensive income, including the issues relating to distinction between therecycling items and the non-recycling items.
I concluded this article that financial reporting should focus on selective use offair value measurements and historical cost measurements, which is a process ofdetermining the cost minimization equilibrium. A balancing act between two
opposing views is an indispensable process for building socially cost-effective
financial reporting system. This conclusion might indicate that accounting standards
should be developed based on the differences in business models, which determines
the behavior of the cost function of each industry or firm.

13

An Historical Analysis on Accounting Recognitionof Executory Contracts
Nobuhiko Sato
Kumamoto Gakuen University
This paper focuses on the extent of recognition on a statement of financial
position for executory contracts, especially lease transactions and derivative
contracts. The assets and liabilities arising from them are expanding in accounting
regulations. Recently, IASB/FASB has published a series of documents requiring
recognition of assets and liabilities arising from non-cancellable operating leasetransactions.
In this study, we discuss that such trends are caused by following reasons.
Firstly, the asset and liability view of earnings has appeared and incorporated insome accounting standards. The asset and liability view includes a thought ofrecognizing all future economic benefits and obligations of sacrificing those benefits
as assets and liabilities on a statement of financial position. Accounting
regulations have not required to recognize obligations arising from non-cancellable
operating lease transactions as liabilities until present time. But, those obligations
meet the definition of a liability.
Secondly, the (financial) components approach has appeared and incorporated insome accounting standards. An executory contract is a bundle of right and/or
obligation components. There are two main viewpoints of treating thesecomponents. One is treating these components as one asset or liability item as awhole. The other is treating these components as each assets or liabilities separately.
The latter viewpoint, that is (financial) component approach, underlies the changing
treatment for executory contracts.
Thirdly, the right of use approach has appeared in a discussion upon accounting
standards concerning assets. This approach can treat lease transactions as an
installment purchase of not an ownership of the underlying asset but a right of usingit.
However, the asset and liability view, the (financial) components approach, or theright of use approach can be a driver of the changing treatment for executory
contracts in each. The most important point is that the above trend is caused by thefusion of these three accounting thoughts.
Based on this analysis, it seems reasonable to suppose that non-cancelable service
contracts will be recognized on a statement of financial position, and thatrecognizing commitments on a statement of financial position with zero amount andadding a footnote about those commitments should enrich the content of corporate
disclosure information.
14

Session 2: An Inquiry into Innovations in Management
Accounting Research and Practice
Innovation Process of Management Accounting
in the U.S. Federal Government
Masafumi Fujino
Nihon University
This study explores the innovation process of management accounting in the
public sector. Drawing upon the history of budgeting and accounting reforms in the
U.S. Federal Government, we demonstrate the generating and developing process of‘Performance Budget’ in 1940-50s as an innovation of management accounting.
Prior management accounting literature has used the term ‘management accounting
innovation’ to signify the creation and implementation of new management
accounting techniques such as balanced scorecard and economic value measures.
This study focuses on not only individual techniques but also the overall system ofmanagement accounting. To identify this distinction between individual techniques
and the overall system in our historical analysis, we build on ideas of the distinction
between technology and domain [Arthur, W. B. (2009). The Nature of Technology.
Free Press].
According to Arthur (2009), novel technology comes into being as new
combination of what already exists. Performance Budget was introduced into theFederal Government by the report of the Hoover Commission in 1949. Performance
Budget was a new technology but its components such as expenditures classification
by function and activity, cost-based budgeting, and account structure existed already.
These components originated from the budgeting and accounting practices of New
York City Bureau and related studies in 1920s.
New technology is defined as one that uses a new principle. A principle is the ideaof some effect or phenomenon in use. New technology is one built upon a novel useof some phenomenon. One of the new principles of Performance Budget was the
explicit separation of the budget execution plan from the congressional budget. The
separation enabled Performance Budget as a new technology to capture and use theoperational effect produced by the clear linkages between input and output in the
public service provision.
Domain is a cluster of technologies. It is a coherent whole, a family of devices,
methods, and practices. Domain could be seen as a repository or toolbox of elements
available for use.
What delineates the cluster is some form of commonality, some shared ability ofcomponents to work together. We found that Performance Budget had a15commonality to management accounting in its organizational phenomena such asline and staff structure and delegation of authority. Although the word “management
accounting” was not actually used in the report of Hoover Commission, the domainof management accounting had emerged in the practices and studies which were
worked on over the following twenty years. For example, a work of governmental
accounting published in 1956 provided a toolbox for management control in theFederal Government. The toolbox included such management accounting techniques
as activity accounting and standard costing. Federal budgeting and management
accounting encountered each other in 1950s and 60s. Innovation as a new
combination form as a result.

16

Management Accounting Innovation
Associated with Advancing Enterprise Group Management
Tomoaki Sonoda
Keio University
Management accounting innovations are classified into four types: (1)Development of new management accounting methods; (2) Improvement ofmanagement accounting methods; (3) Diffusion of management accounting methods
to the departments that have not used them; (4) Advancement of management
accounting theories.
Consolidation segment accounting is one type of management accounting
innovation. Consolidation segment accounting provides important information to
manage an enterprise group to maintain the balance between total optimization andpartial optimization.
Even though segment accounting is one of the most traditional management
accounting methods, there has been little research about consolidation segment
accounting, but annual reports in Japan already disclose consolidation segment
information: segment sales, segment profits, and segment assets. Annual reports use
a management approach to determine each segment range, which is an approachwith a concept analogous to management accounting.
Consolidation segment accounting has characteristics of both consolidationaccounting and segment accounting. Because segment sales contain inter-segmental
sales and some assets are not allocated to segments, the table of consolidation
segment information in the annual report has adjustments to consolidation total sales
and assets. Though we can calculate both the rate of return and the return on
investment of each segment, we should interpret these indexes cautiously on the
grounds of these adjustments.
Although financial accounting prescribes disclosures of consolidation segment
information in
annual reports, management accounting also can use thisinformation for internal management, and consolidation segment accounting may beable to be extended to consolidation segment budgeting. Consolidation segment
information raises some research questions. Are segment ranges of adequate size forinternal management purposes? Which type of performance does top management
emphasize, consolidation segment performance or group company performance?
Are there directors who are in charge of each segment?

17

Importance of Management Accounting Researchon Integrated Reporting
Kazunori Ito
Senshu University
Integrated Reporting (IR) is a system that communicates information about value
creation over time to externals stakeholders. Owing to its usefulness for external
stakeholders, especially investors, IR has particularly attracted the attention of
Financial Accounting Researchers. However, IR is also important from a strategic
management accounting perspective since it enables organizations to generate
information that may help them in the process of value creation. Viewed as such, IR
may represent an avenue for the expansion of management accounting realm. In
light of this expansion, there is a need to revisit the definition of management
accounting and reconsider its boundaries.
The International Integrated Reporting Council (IIRC) had produced a Discussion
Paper which included several papers dealing with IR. In this paper, we focus on
three issues of value creation pertaining to IR.
The first issue is to explain why management accounting scholars should study IR.
In our view, such research should highlight the importance of top management
commitment to IR long term objectives which in turn contributes to an increase inemployees' motivation. Moreover, research is needed to explain how stakeholder’sengagement via interactive communication improves the management transparencyof companies.
The second issue is to define the concept of corporate value. While investors'
focus is in on economic value, companies are increasingly facing pressures todeliver on social and environmental performance. In this respect, IR may be a tool toreconcile between these, seemingly, conflicting forces influencing corporate
environment and expand the concept of corporate value to encompass various
aspects such as environmental, and social and economic dimensions. It is now well
documented that socially and environmentally responsible corporations are likely toappeal to increasingly sophisticated customers thereby boosting their sales andimproving their financial performance.
Third issue is about how we can visualize the value creation processes. IR may
help companies in defining their input capital, business model, and output capitalthrough Octopus Model. However, we believe that investors are unlikely tounderstand value creation via that Model and, for that matter, the balanced scorecard
may be a superior tool for companies to identify such value creation processes.

18

The innovation of management accounting in China.
Ichiro Mizuno
Kansai University
The theme of this whole convention was “a pursuit of the accounting innovation.”
Therefore, I set up the above theme. In the latest China, “創新”（a Chinesetranslation of an innovation）is often used. In this report, I caught the innovation ofmanagement accounting in China a little more widely, included even not only
introduction of a new management accounting theory and technique but the changeof the leader and system in the view, and considered the innovation of Chinese
management accounting.
I have just so far been going to consider development and the feature ofmanagement accounting in China several times. On the report, I introduced theinteresting research paper “development of management accounting theoreticalresearch and business application in China” (Hu and Liu 2013) and discussed the
direction of the innovation of management accounting in China.
I considered the management accounting system of Haier several times until now
as compared with the Kyocera Amoeba System. Zhang Rui Min COE(Chief
Executive Officer) of Haier, always have advocated “創新.” Therefore, Haier has
pursued the innovation also with a continuous business management system
containing management accounting. Haier founded in 1984 expanded business scale
quickly through four gradual development called a branding strategy, diversification
strategy, an internationalization strategy, and a global branding strategy, and has
grown up to be a global major company.
And from 2012, Haier set forth the networked strategy as a new development
stage, and aims at the further business growth. Haier aims at establishment of an
independence management object (referred to as SBU before) in each of these stages.
This independence management object is the important feature of the management
accounting system of Haier. This resembles the amoeba management of Kyocera.
By the way, U.S. IMA advanced to China positively and has strengthened the
preparedness to receive also with China. IMA and the Department of Commerce ofChina have started joint research about Chinese administrative accounting in May,
2006. Furthermore, Chinese IMA developed the cultivation activities of CMA from2010.
The CMA qualification holder has become in May, 2013 with about 1000 persons.
Furthermore, Chinese IMA has also started joint research with Haier about
management accounting. And Chinese IMA sets up May 6 as “the day ofmanagement accounting advertisement” annually from 2012. Furthermore, I havealso started joint research with Haier about management accounting.
19

Session 3: Innovation of Auditing and Accounting Study
Innovation in Accounting Research
Makoto Nakano
Hitotsubashi University
My presentation tries to present three new views on accounting research.
First study analyzes the information contents of income smoothing behavior,especially the role of income smoothing behavior as a signal of future performance.
Income smoothing acts as a vehicle through which managers can reveal private
information about future earnings persistence and future dividend policy. The
empirical evidence supports the information view rather than a garbling view ofincome smoothing, and sheds light on the bright side of smoothed earnings rather
than its dark side (Takasu and Nakano 2012).
Second, I briefly introduced my recent studies on accounting and governance(Nakano and Nguyen 2012; 2013). These studies show that board size and age
affects risk taking behavior of Japanese firms.
Third, I suggest that macro-type empirical financial accounting research may be
one of fruitful area for future research.

References:
Nakano, M., and Nguyen, P., “Board size and corporate risk-taking: Further
evidence from Japan,” Corporate Governance: An International Review,
Volume 20. Issue 4. 369-387, July 2012.
Nakano, M., and Nguyen, P., “Why do firms with larger boards have lower market
values? -Evidence from the investment behavior of Japanese firms-,” 2013,
unpublished working paper.
Takasu, Y., and Nakano, M., “What do Smoothed Earnings Tell Us about the Future?”
The Japanese Accounting Review, Volume 2, 1-32, 2012.

20

Perspectives on Power Law Distribution andExtension to Nonlinear Model
Manabu Sakaue
Hosei University
The view that accounting number follows Gaussian distribution or normal
distribution has been dominant so far in the field of accounting research. However,in fact, some accounting number like income do not follows a normal distribution.
The actual distribution has fat tail curve. This observation strongly indicates thatsome accounting number follows a power law distribution. Along with the normal
distribution, a power law distribution is also commonly found in nature and social
system. It is, for example, widely known in the economics field that income follows
a Pareto distribution that is one of power distribution. There are observations thatsome financial data like income or firm size have similar distribution to Pareto
distribution (e.g. Ijiri and Simon, 1974). It is seemed that accounting researchers
need to put their focus on the power law distribution.
The events that follow the power law will probably be expressed in a
multidimensional nonlinear model. One example of the logistic map, that is one of
the simplest non-linear model for discussion is that the behavior of the logistic map
is very complicated. If the coefficient is less than three, the value is converged to acertain number; if the coefficient is between three and 3.56995 (Feigenbaum point),
the behavior of the value will be a vibration; and if the coefficient is more than
Feigenbaum point, chaotic behavior of the value will be observed (Gleick, 1987).
The actual income numbers do not converge to a certain value or have vibration
behavior, but seems to be randomly changing. If the changes in financial number
like income is described in the form of nonlinear model, the behavior of income will
follow chaotic dynamics (Mondelbrot, 2006). The chaos theory is an element thatconnects the complex events and nonlinear model. In chaos theory, the order in the
randomness is identified by “strange attractor,” The discovery of the strange
attractor could change the way that people view the real world. And there is apossibility of the discovery of new analysis method.
References
Gleick, J. (1987) Chaos: Making a New Science, Penguin Books.
Ijiri, Y. and Simon, H. A. (1974) “Interpretations of departures from the Pareto
Curve firm-size distributions,” Journal of Political Economy, 82: 315-332.
Mandelbrot, B. & Hudson, R. L. (2006) The Misbehavior of Markets: A Fractal
View of Financial Turbulence, Basic Books.

21

Innovative Challenge to Risk Based Audit Approach
Kyoko Miyamoto
Kansai University
This paper examines how auditors apply risk based audit approach in the situationthat fraud risk is high. I conduct an experiment with 87 auditors (i.e., 35 partners, 14senior managers, 22 managers, 13 seniors, and 3 juniors. All of them belong to large
or midsize audit firm) using a fraud case based on SEC’s Accounting and Auditing
Enforcement Releases. First, I find how identification and assessment of the risks ofmaterial misstatement due to fraud (referred to hereafter as the “fraud risk”) relate tomodifying audit program when fraud risk is heightened; (1) fraud risk identification
is not related fraud risk assessment, (2) fraud risk assessment is not related
modifying audit program, and (3) fraud risk identification is directly related
modifying audit program. This suggests that even though auditors do not identify
seeded fraud, they assessed fraud risk as high for now, but on the other handauditors who identified seeded fraud are more likely to respond to the fraud risk.
These results shows that risk based audit approach is not applied based on stepwhich audit standards require. Second, the experimental results show how to
respond to the fraud risk varies significantly among auditors. I classified auditors
according to the comprehensive analysis of characteristics of their response toassessed fraud risk (i.e., selection which one to use from five options for each of 17
audit procedures: (1) perform standard audit procedures, (2) increase sample size,(3) modify nature and timing of audit procedures, (4) omit some audit procedures,and (5) perform some other audit procedures; and the propensity to consult withengagement quality control reviewer about the modified audit program). The resultshows that some auditors do not respond to assessed fraud risk in an effective way
and many auditors do not omit unnecessary audit procedures in terms of efficiency
of financial statements audit.
These two important findings suggest that there is a critical issue in an applicationof risk based audit approach in terms of the effectiveness and efficiency of financial
statements audit. I emphasized that how to apply risk based audit approach haveplenty of room to improve for a proper functioning of the approach. Therefore, I
make detailed proposals aimed at a more strategic risk based audit approach.

22

What is the Innovative Research in Accounting Profession?
Hiroshi Taki
Ritsumeikan University
In this session we discussed the accounting profession research in the context ofglobalization, interdiscipline, and diversification.
Using the framework that Burrel & Morgan (1979) had developed, we examinedthe characteristics of auditing research as a social science. Burrel & Morgan tried toshow there are two approaches, objectivist and subjectivist, based on the mutually
opposed discussions on four dimensions (ontology, epistemology, human, andmethodology). Set aside arguments over their extreme dichotomy, their frameworkseems to provide an important view to Japanese auditing research.
Although most Japanese researchers in auditing tend to believe that European orAmerican accounting professions are more advanced and even more superior to ours.
But if we think, as subjectivists do, that history is just a coincidence and there is "norule" in history, this is not the case. In fact, researches on profession in westerncountries admit that their arguments cannot apply to any other countries (Larson
1977; Macdonald 1995). They do not posit any universal or ideal types ofprofession.
As we could see recent problems on our accounting profession (many passers of
CPA exams could not be employed, and applicants to accounting schools have beenplummeting), we have to recognize our own social context (education system, labormarket, roles of profession in our social system, the way we could assimilate therevolutionary social changes, etc.), and strategically establish the CPA system.

23

2013 Annual Conference of JAA
Special Committee
Accounting Policy and Earnings Management by the Management
Chair: Masao Tsuji
Waseda University
The purpose of this committee is to investigate the role of accounting discretionthat plays in managers’ decision making processes from a management accounting
perspective. We try to shed some light on the accounting policies, income smoothing
and earnings management by empirically examining the above issues, with the aimof providing a research road map for issues on managers’ decision making andperformance management by reviewing accounting policy and earnings management
literature. However, we do not limit ourselves to studying some specific issues but
try to make a building block for an integrated stream of research topics.
In the first year, we first conducts literature review on accounting policy, incomesmoothing and earnings management to search for unsolved research questions. In
chapter 1, the committee reviews the literature from the following perspectives,
analytical model, capital market observations, and corporate governance, to search
for the possible motivations for the management to conduct earnings management.
In chapter 2, we divide the accounting policies adopted by the management into 5
categories: i) criterion for adopting accounting standards, ii) timing to adopt new
accounting standards, iii) choices of accounting treatments permitted by the GAAP,iv) reasonable estimate of the amount of assets, liabilities, revenue and expenses
under uncertainty, and v) choices of accounting items presentation permitted by the
GAAP. We then review the literature based on the above categories.
In chapter 3, we try to shed some light on income smoothing. We examine theaccounting items that can be used for income smoothing and the income targets aswell. At the same time, we also carefully review the prior literature for possible
incentives and motivations for income smoothing. As a result, we find out that there
has been no powerful measure for detecting income smoothing. We also find outthat the literature fails to document the evidences on the capital market reactions tosmoothed income. These issues will be our future research questions.
In chapter 4, we carefully review the earnings management literature. We search
the literature for the methods that managers adopt to conduct earnings management.
We then review the prior literature from two perspectives: accounting management
based on accruals management and real management.

24

Special Committee
A Study on Research Methods
towards a Contemporary Issue in Auditing
Chair: Terumi Takita
Doshisha University
There are many research methods in auditing. But especially in Japan, there is nometa analysis comparing them. The objective of this committee is twofold: the firstis to examine the methodological characteristic of research methods (analyticalresearch, archival research, experimental research, and normative research), and thesecond is to build a framework enabling a comparative analysis of research methods
through a concrete issue in auditing.
In this second year, we focused on the later objective, and our concrete theme ofthis year was ‘internal control and auditing’. We were divided into four sections:analytical research, archival research, experimental research, and normative research.
Our final report includes 4 parts and the last chapter (chapter 12) is our conclusion.
Part 1: a normative research of internal control and auditing (from chapter 1 to 2)
Part 2: an analytical research of internal control and auditing (chapter 3 to 5)
Part 3: an archival research of internal control and auditing (from chapter 6 to 8)
Part 4: an experimental research of internal control and auditing (chapter 9 to 11)
Committee members:- normative research group:
Terumi Takita (Chair, Doshisha University), Yasuhide Harada (Shitennouji
University), Sadanori Yosano (Kobe University), Kunihiro Shimazu (Rissho
University, Research Collaborator)- analytical research group:
Yasuhiro Ohta (Keio University), Atsushi Shiiba (Osaka University), Kohtaro Yabe
(Osakashogyo University)- archival research group:
Kenichi Yazawa (Aoyamagakuin University), Shinya Okuda (Osakagakuin
University), Masumi Nakashima (Fukushimagakuin University, Research
Collaborator), Fumiko Takeda (University of Tokyo)- experimental research group:
Hironori Fukukawa (Hitotsubashi University, Research Collaborator), Masayuki
Ueeda (Aoyamagakuin University), Satoshi Taguchi (Doshisha University)25

2013 Annual Conference of JAA
Subject Research Committee
Transformation of Public Management andthe Functions of the Accountancy
Chair: Kenji Shiba
Kansai University
Member of the Committee
Chair:

Kenji Shiba

Kazuo Aida
Nobuo Azuma
Masafumi Fujino
Kenji Izawa
Ryota Kaneko
Mari Kobayashi
Takami Matsuo
Akira Omori
Shigeo Ohtsuka
Hiroyuki Takano
Morihiko Umeda
Kiyoshi Yamamoto
Toshinobu Yoda

Kansai University

Keio University
Board of Audit of Japan
Nihon University
Ernst&Young ShinNihon
Kokugakuin University
Waseda University
Kobe University Graduate School of Business Administration
Yokohama National University
Chiba University
O-hara graduate school of accounting
Chukyo University
Graduate School of education, The University of Tokyo
Hosei University

Abstract
The Task Oriented Research Committee comprising of 14 members that are
researchers or practitioners produced an interim report on the functions of accounting
and potential functions of the study of accounting in Public Management where there
are different accounting entities involved.
As a general overview, the report discusses the relationship of accounting entities
and the functions of the accountancy in Public Management including global
comparisons. Going into the detailed subject, the report discusses the functions andtasks of accounting for various accounting entities that comprise Public Management.
As a common theme, the report also covers legal, political and technical issues that26

influence the function of accounting in Public Management.
In starting this Committee, there was a question raised by the member on whether“the study of accounting” was appropriate for the committee’s theme of “Thefunctions of the accountancy within the transformation of Public Management.”
There is certainly an argument that “accounting” is more appropriate in coveringboth the theory and practice from the perspective of applying theory to practice andquestions on the theory to be raised from practice. However, it is crucial for theaccountancy to contribute to the Public Management by extracting the essence ofvarious practices beyond accounting that is functioning as a practical system and byforming a theory. The Committee has therefore positioned its theme to be criticaland valuable for the research and development of the accountancy in Japan. In that
respect, this research aims to study the fields and functions where the accountancy
can and should contribute within the changing Public Management with the view tobuilding a theory and is henceforth a pioneer in the study of accountancy in Japan.
This interim report takes that into consideration.
Table of Contents
Chapter1

The Role of Accounting in the Transformation of Public Management

Chapter 2

Relations between Management and Accounting in the Public Sector:
From an international comparative perspective

Chapter3

A Study of Public Management and Accounting Entity

Chapter4

A study ofChapter5

A Study on the Area of Accounting in Public Management

Chapter6

Accounting Functions and Issues of the Central Government of Japan

Chapter7

The Functions and Problems of Accounting in Incorporated Administrative

the Decentralization of Planning Function in Local Governments

AgencyChapter8

The function and problems of accounting in local governments

Chapter9

Not-for-Profit Accounting Issues in Japan

Chapter10

The Functions of Financial Reporting for Not-for-Profit Corporations in Japan

Chapter11

Financial and non-financial information about university management

Chapter12

The role and function of financial and non-financial information of International
Public Sector Accounting Standards

Chapter13

Functions and Challenges of Cost Accounting in Public Management

Chapter14

Public Management from Citizen's Perspective and the Function of Accounting

27

2013 Annual Conference of JAA
Study GroupA Study on Accounting Theory Construction by Theory Research
Chair: Kiyotaka Ueno
Chuo University
The purpose of this study is to acquire the thought and methodology to constructaccounting theory and to indicate future accounting theory study and theory
construction by studying representative theory of accounting researchers. In order toattain these research purposes, this study focuses on the following tasks:(1) Take up the representative accounting researchers and present those theories indetail.
(2) In that case, focus on accounting thought and methodology of each theory,
present those contents in detail and consider the influence of those theories onsubsequent accounting.
(3) Consider the accounting purpose, accounting structure, accounting
measurement, income concept and accounting function of each theory in detailwhen we examine the accounting thought and methodology.
(4) Consider the social background of each theory and explicate the relationshipbetween contemporary accounting and each theory, because the accounting
thought and methodology relate to the social and economical situation at thattime.
(5) Try to logical integration of accounting theory construction, explicate the typesof accounting theory construction and construct a general theory in accounting.
The interim report contain introduction, part I: the dawn of accounting theory, part
II: experience and acquisition cost accounting and part III: road to the fair value
accounting.
Introduction describes the followings in order to facilitate the subsequentaccounting theory research and those understandings and arrange the accounting
theory construction.
(1) Explain the accounting theories took up in the interim report. In that case, these
theories are divided three parts according to age and accounting measurements.
(2) Analyze these accounting theories. In that case, the important accounting field
are accounting essentials and accounting measurements, so each accounting
theory is classified by these fields.
(3) Consider the influence of those accounting theories on contemporary
accounting, in particular, indicate the remained theory and disappeared theory
and their reasons.
28

(4) Reveal the characteristic of contemporary accounting and its problems andsuggest the tasks and direction of accounting theory construction in the future.
In part I, as accounting theory belonging to the early days around 1900, theories
of Sprague, Hatfield and Paton are explained. In particular, Sprague and the basic
accounting principle, Hatfield and corporation accounting and Paton and business
entity theory are explained.
In part II, as accounting theory claiming acquisition cost accounting based onconventions and experience during 1930s to 1960s, theories of May, Littleton andIjiri are described. In that case, May and accounting principles, Littleton andacquisition cost basis and Ijiri and accountability are concretely described.
In part III, as accounting theory asserted so called current value accounting from1960s and became the base of present fair value accounting, theories of Sprouse andMoonitz, Edwards and Bell, Staubus, Chambers, Sterling and Lee are explained.
Particularly, Sprouse and Moonitz and assets and liabilities view, Edwards and Belland business income, Staubus and decision usefulness, Chambers and environment
adaptation, Sterling and science, and Lee and realizability are explained.
Chair:
Kiyotaka Ueno (Chuo University)
Members:
Chizuru Asano (Meiji University)
Hiroshi Ishiyama (Yamanashi Prefectural University)
Noriko Ichikawa (Surugadai University)
Masayoshi Ono (Chiba Economic University)
Tomohiro Kaneko (Iwate Prefectural University)
Katsuhiko Shimamoto (Kwansei Gakuin University)
Hirosi Nagashima (Jiyugaoka Sanno University)
Masaaki Narikawa (Takasaki Commerce University)
Tetuji Nishiyama (Takachiho University)
Kenji Hayashi (Nihon University)
Jun Hishiyama (Senshu University)
Atsuhito Masiko (Toyo University)
Tomoya Yoshida (Saitama University)
Ryusuke Watanabe (Kanto Gakuin University)

29

Study GroupA Study on Disclosure and Assurance of Risk Information－Toward Integrated Reporting－
Chair: Noriyuki Konishi
Aoyama Gakuin University
Risk information is fundamental to financial reporting users assessing andpredicting about the future cash flow of an entity. It is generally accepted that risk
information is critical to understanding the financial performance and position of anentity. It is therefore generally accepted that a better understanding of risks byinvestors and other stakeholders would be beneficial.
We can explain the concept of risk in terms of uncertainty, probability, effect andoutcome. Once the probability, cause and effect of an occurrence can be determined
then a probability distribution can be computed. From this probability distribution,over a range of possibilities, the chances of risk occurring can be determined, thus
reducing the uncertainty associated with this event.
Recent market volatility and significant changes in credit standing and investment
returns have drawn particular attention to information on risk exposures and how
entities manage them.
Our study identities the following broad group of risk disclosures.
(1) measurement and recognition risk / uncertainty - risk directly linked toassumptions and judgments included in the reported number.
(2) risk that an entity is exposed to due to the business it is in;a. business risk linked to the impact of a change in operating objectives.
b. business risk linked to the exposure to market conditions or other external
factors.
(3) information on an entity risk’s appetite.
In particular, risk information (a)assists financial reporting users to understand thepotential for loss and gain in the entity’s assets and liabilities,(b)provides insight
into the performance of an entity in the current or prior periods by revealing therelationships between the level of returns obtained and the exposure to risk that has
been taken,(c)helps financial reporting users understanding the resilience of theentity and its ability both to withstand adverse changes in market and otherconditions, and to take advantage of favorable changes in those conditions.
So risk information can be disclosed in the financial reporting, financial andnon-financial information can be integrated and the assurance of risk information30

can be possible. Even if sharing the concept of risk in the financial reporting and theassurance is limited, we should consider the possibility of the assurance.
We discussed the 12 issues in the final report; (1)Noriyuki Konishi, “AnImportance of Risk Information Disclosure,” (2)Noriyuki Konishi, Yoshihiro
Machida (Aoyama Gakuin University) and Hironori Fukukawa (Hitotsubashi
University) , “A Concept of Risk on Financial Reporting and Audit,” (3)Yoshihiro
Machida, “Assurance Engagements in Financial Reporting Systems in Japan,”(4)Hidetsugu Umehara (Chuo University), “Accounting Recognition of Intangibles－A Fair Value View－,” (5)Kazuhisa Otogawa (Kobe University), “The Risk
Inherent in Fair Value Measurement: An Analysis of the Day-Endstock Price
Changes,” (6)Noriyuki Konishi and Yoshihiro Machida, “Disclosure of Notes toFinancial Statements and their Audit,” (7)Kazuhisa Otogawa, “Disclosure of
Quantitative Market Risk Information in Commercial Banks,” (8)Hyon Ok Kim(Tokyo Keizai University), “Business Risk Disclosure in Pharmaceutical,” (9)Hyon
Ok Kim and Hironori Fukukawa, “Auditors' Involvement with the Disclosure of
Corporate Business Risk,” (10)Takashi Asano (Tokyo Metropolitan University),“Verifying the Credibility of Forward Looking Information － A Test of theConfirmation Hypothesis－,” (11)Masaki Yoneyama (The University of Tokyo),“Behavioral Principles of Related Parties Toward the Disclosure of Risk
Information,” (12)Noriyuki Konishi, “Towards Integrated Risk Reporting.”
It is stated that enhanced information about what companies do to assess andmanage risk will (a) provide practical forward-looking information, (b) help toensure the equal treatment of stakeholders, (c) encourage better risk management,(d) reduce the cost of capital, and (e) improve accountability of management,
investor protection and the usefulness of financial reporting. Disclosure andassurance of risk information are becoming an integral part of the financial
reporting.

31

2013 Annual Conference of JAA
Chubu Session: Great Transformation of Accounting

Innovation in Financial Statement Presentation
Chair: Nobuo Kamata
Chubu University
FASB and IASB have identified some defects of the existing presentation
standards. Through their joint project, the boards are striving to improve theusefulness of financial information. IFRS X “financial statement presentation” isintended to address users’ concerns that transactions or events that are recognized incurrent financial statements are not described or classified in the same way in eachof the financial statements.
There is a lack of consistency in the financial statements as to how information ispresented across entities. This can make it difficult for users to compare operating
income with operating cash flows. The inconsistent level of disaggregation offinancial statement line items across companies can make it difficult to analyze anentity’s performance relative to other entities. Insufficient disaggregation also poses
difficulty for evaluating changes in net assets because changes in values frommarket-price fluctuations have different future effects for future cash flows thanother changes in net asset values. However, these amounts, arisen from different
economic events or transactions are often aggregated in the statement ofcomprehensive income.
IFRS X proposes to apply to these issues through two core principles of financial
statement presentation. These are disaggregation and cohesiveness. The
disaggregation principle states that an entity presents information so that the entity’s
activities and cash flows are clear and that the relation between assets or liabilities
and the effects of their changes are “faithfully presented across the statements offinancial position, comprehensive income, and cash flows.” The cohesivenessprinciple states that information should be presented in a manner so that therelationship among items is clear, across financial statements.
The end goal of the joint project is the establishment of a consistent structure of
the statements of financial position, comprehensive income and cash flows, which
would require specific sections, categories or subcategories and related subtotals.
We discussed about the innovated idea of the proposal and concluded that thedirect method statement of cash flow is consistent with the end goal of the project.

32

Possibility of New Accounting Model for Stakeholder Capitalism―Innovations from Funds Theory of Accounting―Michimasa SatohAichi Gakuin University
Nagoya, the central area of Japan, is also the center of the research network forFunds Theory of Accounting. Theories, thoughts and ideas concerning to thisresearch area have been stored in this network. Some of the ideas developed here,
such as [X] and [Y] below, have potentials to contribute to the innovation of global
financial reporting. In the IASB's new Conceptual Framework, "cash flow" is theelement of financial statements, because the statement of cash flow is one of the
primary financial statements.
Comparison of Three Accounting Views
Accounting View

Asset and Liability View Revenue and Expense View

Funds Flow View

Core Financial Statement

B/S

P/L

C/S

Central Element

Asset and Liability

Revenue and Expense

Cash Flow

Character of Balance Sheet

Statement of Financial
Condition

Sheet of Accounts Balance

Status of Cash Flow Statement

Schedule of Cash a/c

Supplementary Statement

Method of Income
Determination

C1 - C0 = P

R-E=P

[ X]

Type of Double Entry
Accounting System

2 Dimensional Double Entry Accounting[Y]

Static Statement ofFunds Flow
Primary Financial
Statement

X = FAIR (Funds Flow
Approach of Income
Reporting) :CFO ± accruals = P
Y = 3DAS (Three
Dimensional Double
Entry Accounting
System)Satoh, Michimasa[2000], "Three Dimensional
Double Entry Accounting
System," Okayama
Economic Review, Vol. 31,
No. 4, pp. 133-151.

Recently, the new accounting model has been coming out. It seems that the
IASB noticed the need to reconsider the conventional accounting model.
Both the FASB and the IASB had their old conceptual framework before 1990.
However, the rapid globalization, after the crash of the Berlin Wall, compelled theBoards to reform their old frameworks. In September 2010, the IASB jointly with
the FASB released the new conceptual framework on phase A.
The "Objectives of the General Purpose Financial Reporting" (Chapter 1) issignificant, because it “forms the foundation of the Conceptual Framework, and theother aspects of the Conceptual Framework flow logically from this.” This Chapter
1 consists of deliberately considered 21 paragraphs, in which we cannot see thecontrast between the RE view and the AL view. Neither the term “net earnings” nor“net assets” nor “stockholder capital” comes out. Instead, the term “cash flow”
appears frequently. What is more important, they grasp accounting system by33

the Equity Equation: Resources = Claims.
Overview of Accounting Theory Development
Proprietary Theory

Sprague(1907)
Business Theory
Paton(1922)

FASB(1978-1985)

Cash Theory
Vatter(1947)

Satoh(2000)

Someya(1956)

Anthony(1984)
IASB(2006-2010)

RE View
AL View

Stakeholder
Capitalism

Stockholder
Capitalism

Whathappenedonearth?
The
great
transformationinaccounting. It is not a
simple shift from the RE
view to the AL view.
Contrasting these two
opposing views was thedevice made by the FASBof the U. S., where thestockholder capitalism isdominant.

What has changed was the premise of financial accounting. The conventional
proprietary theory (in which the RE view and the AL view were developed) foundout to be improper to cover some modern organizations. The Funds Flow view,
with the entity theory, has come to the front. This accounting transformation may
promote the transformation of capitalism: stockholder capitalism to stakeholder
capitalism.
Anthony[1984] suggests conventional
Balance Sheet under the Entity Theory
retained earning can be separated into
Stockholder Capital and Stakeholder Capital.
Liabilities
Although Stockholder Capital section may
need a special governance, this separation
Asset
increase the feeling of stakeholders'
participation. (Robert Anthony, Future
Stockholder
Capital
Stakeholder
Capital

Directions for Financial Accounting, Dow
Jones-Irwin, 1984.)

On August 30, 2012, Professor Baruch Lev concluded his special lecture (for the71th Conference of JAA at Hitotsubashi University) with the massage as follows.
“The world benefitted from so many Japanese innovations and contributions,perhaps it is time that the accounting world will benefit from a Japanese
accounting makeover.”Now, Japanese accounting researchers are expected to demonstrate the efforts tothis direction. I hope this kind of effort that I am doing is the one, or one of them.

34

2013 Annual Conference of JAA
International Session

Arrangement of Financial Position and Value Relevance
Hyuk Shawn, Keimyung University

Departing and Incoming Auditor Incentives, and Auditor-Client
Misalignment under Mandatory Auditor Rotation: Evidence from
Korea
Gil Bae, Korea University

Audit Partner Disciplinary Actions and Financial Restatements
Yahn-Shir Chen, National Yunlin University

Board interlocks and auditor industry expertise
Ling-Ching Chan, National Chengchi University

35

2013 Annual Conference of JAA
Regional Reports

Hokkaido Region
Koichiro Matsumoto
Hokusei Gakuen University
The regional meetings were held in 2013 as follows.
1. The 83rd Regional Meeting at Sapporo University on 1 June, 2013.
(1)“On the Usefulness of Quarterly Financial Information,”Sayako Matsumoto,Hokkaido Information University.
(2)“Do Consolidated Tax Return System Influence Corporate Governance andTax Avoidance?”Yuzuru Sakurada, Hokkaido University and Hiroshi
Ohnuma, Tokyo University of Science.
(3)“A Study on Disclosure of Accounting Information for Social Enterprises:
Focusing on Usefulness of the Value Added Information,”Masaaki Ohara,
Hokusei Gakuen University.
2. The 84th Regional Meeting at Hakodate University on 10 November, 2013.
(1)“Application of Theory of Herrschaft to Budgetary Procedure,”Shinpei
Kamiyama, Otaru University of Commerce.
(2)“Accounting Standards for Restructuring,”Junji Kubo, Hokkaido University.
(3)“Double

Account

System

in

the

Late

19th

Century

Railroads,”Mitsunori Kasukabe, Hokkaido University.

36

AmericanTohoku Region
Masahiro Shiseki
Aomori Public College
In 2013, following meetings were held.
1. The 84th Meeting, July 27, 2013 at Hirosaki University(1) “The Problems of the Designated Administrator System of Public Facilities andthe Possibilities of Citizen’s Participation in Aomori Prefecture: Towards
Partnership of Administration and Citizens in the New Public Domain”
Tadahiko Kon, Aomori Public University(2) “Accounting Entity and Stock Options”
Tomohisa Hirano, Fukushima University(3) “A study of Income Concept in Tax Accounting: the Relationship between
Income and Capital”
Tomohiro Kaneko, Iwate Prefectual University(4) “Requirement of the Future and Evaluation about CSR”
Tadashi Ishizaki, Shoin University

2． The 85th Meeting, November 2 and 3, 2013 at Fujiya Hotel in Owani Onsen(1) “Issues of Accounting for Intangible Assets in Germany: With the Focus on the
Research Methodology”
Masahiro Shiseki, Aomori Public University(2) “Reconstruction of Small Business from Great East Japan Earthquake in
Ishinomaki”
Tomoko Okano, Ishinomaki Senshu University

37

Kanto Region
Ryuichi Nakajima
Meikai University
The 61st Kanto regional meeting was held at Meikai University on November
30,2013.
The main theme of the meeting was “Shift in business models and paradigm shift
in Accounting.” Discussions were coordinated by Yasunori Matui, Rikkyo
University.
The presentations and panelists were follows:(1) “Financial reporting reform and its impact on Japan,” Ryuichi Nakajima, Meikai
University.
(2) “Hospital management reform and amoeba management,” Fumiko Hiki,
Hitotsubasi University.
(3) “Shift in business models
Hasegawa,Waseda University.

and

38

management

accounting,”

KeiichiChubu Region
Akihiro Noguchi
Nagoya University

The regional meetings were held as follows;
1. The 131st Regional Meeting at Gifu Keizai University on July 6, 2013.
(1) “Nonprofit Activities of the Diversified Organizations and Corporate Taxation,”
Shinjiro Ishizaka, Gifu Keizai University.
Discussant: Kazuo Kutsukake, Yokkaichi University.
(2) “Issue Equity Theory and Entity Equity Theory for the Consolidated Financial
Statements,” Akihiro Noguchi, Nagoya University, and Masako Futamura,
Otaru University of Commerce.
Discussant: Ichiro Mukai, Aichi Gakuin University.
(3) “IASB Staff Draft for the Disclosure of Cash Flow Information,” Hidenori
Endo, Tokai Gakuen University.
Discussant: Eiju Nikawa, Chubu University.
2. The 132nd Regional Meeting at Nanzan University on December 7, 2013.
Research Paper Presentation(1) “Systemization of the intellectual assets from the accounting perspective,”
Tomoya Kondo, Graduate student of Nanzan University.
Discussant: Masataka Hiraga, Aichi Gakuin University.
(2) “Verification of the effectiveness of accounting information in the stock market
by the variable coefficient regression model,” Kazuhiro Manabe, Nagoya
University of Foreign Studies, and Masaru Chiba, Fukui University ofTechnology.
Discussant: Kazuo Yoshida, Nagoya City University.
Plenary Session(Guest CPA Speaker)“Status quo and the future of auditing for the public sector,” Hirohiko Takahashi,
Tokai Chapter of JICPA.
(Guest Academic Speaker) “Issues on public sector accounting reform,”
Takahumi Kamei, Nanzan University.
http://www.soec.nagoya-u.ac.jp/~noguchi/chubu/english.htm

39

Kansai Region
Tae－Young Park
Momoyama Gakuin Universlty
The 63rd Kansai regional meeting was held at Momoyama Gakuin University on
December 7, 2013. The main theme of the meeting was “3Es of Public Sector
Accounting Reform.”
The discussions were coordinated by Kenji Shiba, Kansai University.
The reports and panelists were as follows.
(1) “Review of the Reform of the Accounting System in Public Sector inJapan from the Point of 3Es,’’ Ryoko Shimizu, Kansai University(2) “Current Status and Issues in Public Sector Accounting,” Hideki Fujii,
Kyoto University(3) “Effectiveness and Issues of the Accrual-basis Accounting inManagement Control System, ” Takami Matsuo, Kobe University
In the morning we had six presentations in the two rooms as follows.
(1) “Relationship between R&D Productivity and the Creation of Corporate Value:
Empirical Research on Pharmaceutical Industry in Japan,” Tan Peng, Kwansei
Gakuin University(2) “Certain Considerations Concerning Restricted Stock Type Stock Option Plans,”
Katsuyuki Yamashita, Otemon Gakuin University(3) “On Calculative Characteristics and Unsolved Problems of the Common
Consolidated Corporate Tax Base (CCCTB) in the European Union,” Hideki
Kubota, Konan University(4) “Experimental Research on Matching an Audit Firm and CPA Successful
Candidate in Japan, ” Yoshitaka Hirose, Doshisha University (Doctoral
Candidate)(5) “Real Earnings Management and Stock Ownership in Japan: an empirical study,”
Natsuko Yokoyama, Kwansei Gakuin University (Doctoral Candidate)(6) “Developments of Advance Pricing Arrangements for Transfer Pricing Taxationin China,” Liu Gongping, Kwansei Gakuin University (Doctoral Candidate)40

Kyushu Region
Keiichi Oishi
Kyushu University

The Japanese Accounting Association (JAA) Kyushu regional conferences are
regularly held twice a year – in July and March. This academic year, the summer
conference was held at Beppu University, and the early spring conference was heldat Fukuoka University.
1. The 92nd meeting at Beppu University, on 27th July, 2013.
(1) “A Study on Accounting Standard-Setting: Focused on the Relation between
U.S. Congress, SEC, and FASB after 2001,” Tomohiro Abe, Doctoral Course,
Graduate School of Economics, Oita University.
(2) “On the Measurement Problems of the IFRS's Conceptual Frameworks,” Isamu
Iwasaki, Kyushu University.
(3) “Accounting Principle and Tax Accounting : From the Viewpoint ofInternational Convergence of Accounting Standards,” Hideo Suenaga,
Kumamoto-Gakuen University.
2. The 93rd meeting at Fukuoka University, on 28th March, 2014.
(1) “The Decision Usefulness and Revenue Recognition: an Exploration of the
Meaning,” Hiromi Watanabe, Fukuoka University.
(2) “A Study on Institutional Complementarity of Accounting Standards in Japan,”
Shigeru Hirakawa, Kinki University.
(3) “The Impacts of Invisibility of Accounting on the Functional Effects and the
Dysfunctional Effects of Target Costing,” Norio Kato, Oita University.
(4) “A Study on Regaining Profitability and Competitive Advantage with Strategic
Cost Management in a Local Shipbuilding Company in Japan: from the
Perspective of the Practices of Company A and Parallels between the Japaneseand Korean Shipbuilding Industries,” Kosuke Miyaji, University of Nagasaki,
and Shino Hiiragi, Yamagata University.

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