Melco Management Accounting Research
Discussion Paper Series
No.MDP2016-005

Effect of IFRS Adoption on Corporate Strategy and Performance Measurement:
Empirical Evidence of Japanese Manufacturing Companies

November 2016

Yuta Hoshino

Graduate School of Modern Management, Sugiyama Jogakuen University
17-3 Hoshigaoka-Motomachi, Chikusa-ku, Nagoya 464-8662, Japane-mail:hoshino@sugiyama-u.ac.jp

The Melco Foundation
Nagoya, Japan
Discussion Paper Series of the Melco Management Accounting Research, in order to promote thestudy of management accounting, has published this unfinished paper onto the Web. Please obtain thepermission of the author when citing this paper.

Effect of IFRS Adoption on Corporate Strategy and Performance Measurement:
Empirical Evidence of Japanese Manufacturing Companies

Yuta Hoshino
Graduate School of Modern Management, Sugiyama Jogakuen University
17-3 Hoshigaoka-Motomachi, Chikusa-ku, Nagoya 464-8662, Japane-mail:hoshino@sugiyama-u.ac.jp

Abstract
The International Financial Reporting Standards (IFRS) are becoming the leading principles and a
special driver for the convergence of financial and management accounting in over 130 countries
including the voluntary adoption. The purpose of this study is to examine the impact of the adoption of
IFRS on management accounting. More specifically, this study investigates the differences in theimportance of strategy goals, and financial and nonfinancial measures that have changed after its
adoption. The results of a questionnaire survey conducted on Japanese manufacturing companies
indicate that the effects of respondent firms provide with management accounting practices andtechniques before and after the adoption of IFRS. My findings suggest that there seem to beconsiderable differences in the importance of strategy goals, and financial and nonfinancial measures
before and after IFRS adoption.

Keywords: IFRS; management accounting; strategy goals; financial measures; nonfinancial measures
Data Availability: Data pertaining to the individual firms used in this study cannot be made public due
to confidentiality agreements with respondent firms.
JEL Classification: M41

1

1. Introduction
The purpose of this paper is to clarify the changes between before and after adoption of theInternational Financial Reporting Standards (IFRS) by an enterprise, on strategic goals and financial
performance measurement. IFRS adoption may have a significant effect on the business management
basis of Japanese companies, such as preparation of the annual report by profit disclosure using
comprehensive income, retention of cross-shareholdings, business strategy such as mergers andacquisitions (M&A), improvement of the business process, and renewal of the information system.
The current trend of accounting internationalization worldwide has evolved by converging theaccounting standards of each country with the International Accounting Standards toward a directionthat promotes and encourages IFRS adoption. In the section of “purpose of the constitution” in the
IFRS foundation, it was newly specified in March 2010, that IFRS was also adopted throughconvergence.1
However, the movement toward IFRS adoption in Japan is still very slow. In June 2009, theinterim report by the Financial Services Agency in Japan was announced, and it was leaning toward
IFRS adoption. Consequently, the consciousness of the enterprise rapidly increased. The enterprise,
which begins to move for early adoption has also appeared.2 Then, in the schedule, whether or not it
imposed the adoption by the listed enterprise in 2012 would be finally judged, and the directivity of the
duty also worked out the adoption in 2015 or 2016. However, the road map to IFRS adoption by
Japanese enterprises is not yet clarified, although the Accounting Standards Board of Japan (ASBJ)
and the International Accounting Standards Board (IASB) keep the regular consultation afterwards.
The fact is that the presentation of the securities reports by IFRS has still not been accepted, eventhough the convergence is progressing in Japan.
It was opined that people of the affirmative side should adopt IFRS to all listed enterprises at the
beginning 2009, but it remains an idea limited to a part of listed enterprises at present.3 After all, it
must be recognized that the directivity of the discussion for IFRS adoption is still not clarified. On theother hand, countries (declaring country is contained) where IFRS is being adopted or converged
already include over 130 nations. The accounting standards of the world surely approach the directionof IFRS introduction, if the fact is considered, and it will only be a matter of time when the adoption
starts in Japanese enterprises. Therefore, it can be easily considered that it does not become
1

IASC (2010, p.5). The opening process of this article of association had been approved in January 2010, and was brought into effect inMarch 2010 by the International Accounting Standards Board (IASB). It was then revised in December 2010.
2
Nihon Dempa Kogyo Co., Ltd., of the crystal device company, voluntarily applied international accounting standards to their accounts forthe year ending March 2010. Afterwards, it was made public that Sumitomo Corporation and HOYA in March 2011; Nippon Sheet Glassand Japan Tobacco in March 2012; the DNA, Anritsu, and SBI Holdings in March 2013; Rakuten, Chugai Pharmaceutical, and Asahi Glass
Company Limited in December 2013; and Softbank and Marubeni Corporation in March 2014, etc. apply voluntarily.
3
Accounting’s editorial staff (2012, p.69). Tsujiyama (2012, p.52) assumes the concrete project that IASB and FASB advance to ameta-rule of a standard making for the internationalization of accounting and the idea of a standard setting, and explains the structure.

2

advantageous for the performance measurement of Japanese enterprises at all, even if IFRS adoption
was delayed slightly.
Of course, the effect of IFRS adoption widely reaches not only changes in the preparation of theannual reports but also reviews of the financial measures as an evaluation base and the businessprocess as a means of business management. In short, due to the changes in the financial measures
after IFRS adoption, the effect on corporate performance is not small at all. It is proven that thefinancial performance of Japanese companies fluctuates, considering the international convergence ofaccounting standards as an opportunity. There exists research that indicates that this fact may
significantly affect the dividend behavior and investment behavior of Japanese companies.4 After all,though the business process reform of such enterprises is the necessary for IFRS adoption, the global
and common evaluation measure is possible, and as a result, the effect of the merit that M&A strategy
becomes easy, is important. The content of the financial report measured by IFRS adoption is greatly
useful for the management, having interest in future results rather than past performance, as the
judgment material of the performance evaluation.
IASB has carried out the idea under the expected purpose, and have undertaken the mission of
finally fulfilling the following tasks for global investors; (1) to offer high quality, transparent, andpracticable information through the international accounting standards, (2) to promote utilization andstrict adoption of the accounting standards, and (3) to harmonize the accounting standards of eachcountry and IFRS with high quality.5 Therefore, IFRS adoption is important not only for disclosure tooutside stakeholders but also the inside management.
Further, this paper examines the effect of adoption on the management accounting technique,while the problems of IFRS adoption are investigated. IFRS adoption is supposed to significantly
affect the strategic objectives, and financial and nonfinancial measures. Therefore, by theinternationalization of the accounting standards, the situation of importance and change of theavailability is examined, and implies a meaning that is important for performance measurement anddisclosure of future companies. Based on such problem recognition, this paper carries out a mailquestionnaire survey for Japanese companies. The effects of IFRS adoption on the management
accounting technique are demonstratively analyzed.
2. Research Questions and Related Literature
2.1 Verification subjects with IFRS adoption
4

Kagaya (2012, pp.42-43&pp.46-52). In his thesis, it is proven that it has a negative influence on the investment behavior of Japanese firms
when the introduction of IFRS focuses on the change of sustainable cash flow at the profit attribute, especially the future, and the change ofthe profit is large.
5 IASB (2004). The purpose of first IASC was very simple, having provided the organization and the function of the foundation rather thanmovement for the convergence.

3

IFRS adoption has several merits: (1) it is undertaken by stock investment and merchandisingexceeding countries and regions; (2) since the appropriation rule of sales and profit differs, it is notpossible to offer judgment material that can be compared internationally; and (3) the evaluation andreliability of the enterprise increases, when the common measures for the enterprise are adopted.
However, it also has some demerits: (1) it is exposed to the severe evaluation of global investors; (2)the individual judgment is obtained based on the principle; and (3) time and cost depend on theconversion to the new standard from the existing one.
On the other hand, we need to bear in mind the effects of IFRS adoption on Japanese companies:(1) governance of consolidated accounting; (2) improvement of the internal control system resulting
from the disclosure of information strengthening; (3) the substantiality of intangible assets’ disclosure;and (4) strengthening of accounting literacy.6
By the introduction of IFRS, a large change is anticipated for management control throughglobal motivation of the increase of the opportunities for transactions and investment activities inwhich enterprises trade in foreign countries. Therefore, it is important to establish the performancemeasures for global consolidated accounting. On the other hand, statement of financial condition,statement of comprehensive income, and statement of cash flows, etc. will be newly used, if IFRS isapplied, and it becomes impossible to correspond by the traditional financial performance measuresused currently. Since the principles of accounting may change if IFRS is introduced, numerical values,
such as sales revenues, expense, assets, and liabilities, also change. As a result, it is unclear how thevaluation levels of financial measures of return on equity (ROE) and return on assets (ROA), etc.
change. Then, to correspond to IFRS, the accounting evaluation system by which the top management
can follow the performances of each department is requested to be maintained. Specifically, it isnecessary to research management accounting by confirming how the relation between the
management action and the performance measurement system of the firm changes after introducing
IFRS, and collecting the data of the firm.
First, the performance measurement system should become one management accounting system
to compose a new management technique for strengthening the industrial and global competitiveness
only because of disclosure of the financial results. It is necessary to clarify the measures that should not
only construct a useful management accounting system for the financial reporting of outside
stakeholders, but also to support a variety of management processes, and to construct a usefulperformance evaluation system for motivating management's organizational behavior in Japan that
may adopt IFRS in the near future. Moreover, if new "statement of financial performance" by
non-financial information can be presented, it will become useful material for investors. In that sense,
it seems that the influence of IFRS introduction on the performance appraisal system in Japanese
6 Hoshino (2012, p.43). Refer to this thesis for the reason why international accounting standards are focused on, and the features, etc.

4companies will grow significantly in the future. Specifically, it is important to understand how the
introduction of IFRS can unite the accounting business processes of Japanese companies and overseas
group companies. Further, it is necessary to confirm how the performance measurement index changes
by the uniformity.
It is necessary to review the management accounting system including budget management anda mid/long-term managerial planning, etc. because the standard of measurement for sales and profit isdifferent between such a standard and the Japanese standard after applying IFRS. Therefore, after
introducing IFRS, it is necessary to do the decision-making according to the information evaluated by
new measures with stakeholders such as investors and stockholders because the performance so far
will be evaluated by different financial measures. In addition, the results of a survey conducted indicatethat in European firms that apply IFRS, 45.7 percent of the companies have increased with gross profit,and 22.0 percent with net assets. Moreover, the following results of the survey reported how the
management strategy changed: (1) 20.3 percent companies came to value the property efficiency
thoroughly, (2) 13.6 percent companies became positive in M&A, and (3) companies that act rashly
during business withdrawal constituted 3.4 percent.7
Thus, the introduction of IFRS makes it possible to manage the entire business of the global
companies by standardizing the accounting rule both in the headquarters and in the overseas groupcompanies. Of course, financial numerical values collected from each company in an overseas groupshould construct a new accounting measurement system about the budget management and theperformance evaluation of the headquarters in conformity with it because it is calculated by the IFRS
standard. Further, after introducing IFRS, the viewpoint of how the business can be developed in the
future becomes more important than past performance in globalization.
Further, it is necessary to examine the aspect of the research here valuing the following aspects:(1) change of management strategic goals and accounting systems, (2) shift from net income tocomprehensive income, and (3) conversion from income expense approach to assets liability approach.
Comprehensive income is the amount of the change under the expectation of the change of unrealized
profits and losses related to securities and derivatives (variance of the estimate), and the foreign
currency transaction adjustment, etc. was added to the net income here. In other words, thecomprehensive income looks considerably different from the net income shown as income fromoperating activities in the last line of the income statement (bottom line). Since saleable value such as
unused land is included in the comprehensive income that shows the change of net assets, Japanesecompanies that have been traditionally valuing sales and profit might have a sense of incompatibility.
However, because the net income (profit or loss) is connected with "earnings manipulation" involving

7 Nikkei Business (2010, p.22 and p.32). A numerical value concerned is based on the joint investigation by the Nikkei business magazineand Audit Corporation [Avantia]. This investigation is the result of the responses from 116 of 540 companies listed in Euronext of Paris.

5

increasing the income by selling off the cross-holding of shares if the performance deteriorates, that
forms the ground for introducing comprehensive income.
Thus, two hypotheses are defined as verification subjects in this paper. If the strategy and theevaluation rule are different regardless of the introduction of IFRS, the following hypothesis is derived.
Hypothesis 1: There is a difference in the degree (use level) valued between a strategic objective
and, financial, and nonfinancial measures.
On the other hand, when the profit and approach are made assuming conversion by introducing
IFRS, another hypothesis is derived.
Hypothesis 2: There is a difference in the degree of valuing strategic goals, financial measures,and non-financial measures when comparing it before and after the introduction of IFRS.
In this paper, first, these hypotheses 1 and 2 are together set as an alternative hypothesis (H1).
Second, strategic goals, financial measures, and nonfinancial measures are classified into three null
hypotheses (H0) respectively in Chapter 4, and last, it is given official approval whether H0 is
dismissed respectively. Next, we examine the content of prior research that examined the effect of theapplication of IFRS on management accounting concerning such problems.

2.2 Related prior researchThis chapter will examine the domestic and foreign prior research that study the influence thatIFRS introduction exerts on achievement measurement.
There are neither too many applications of IFRS nor research on its relation with management
accounting. First, this chapter enumerates an overseas prior research. The research of Cohen andKaratzimas (2012) was regarding the influence that IFRS adoption exerts on management accounting.
They examined the use of financial data of companies and the influence on the management
accounting practice after it converts to IFRS. Specifically about companies in Greece , they clarify
how the interaction between the manager's decision-making, internal reports, and external reports
changes. This shows that the more the financial data is used for internal reporting purpose, the more
the use extends to the management accounting purpose like decision-making and performance
evaluation.8
On the other hand, Prochazka (2009) examines the influence of IFRS introduction on financial
and management accounting in the Czech Republic. He points out that we cannot prevent IFRS from
improving the quality of financial reporting, and making the management accounting high-quality as
the main standard besides financial accounting as the base.9 Thus, he indicates that the coexistence
8 Cohen and Karatzimas (2012). The implication concerning the decision-making and the interaction on influence to the business ofmanagement accounting after IFRS is introduced here, especially between internal and external reports is useful.
9 Prochazka (2009). He analyzes the influence given to net income between the Czech Republic accounting standards and the IFRS. In the6between management and financial accounting will subsequently become inevitable.
In addition, though it is not a research in the area of management accounting, the profit attributechanges by introducing IFRS, and in the enterprise that adopts performance-based incentive systems,
there is a research case that changes in financial performance by it influences even managementcompensation. Ozkan et al. (2012) can be considered one of the related research studies. They verify
the influence on pay-for-performance sensitivity (PPS)10 and relative performance evaluation (RPE)
by IFRS adoption in the European Union (EU), and research the importance given to the utility of theaccount information in the management compensation contract.11
Further, the feature of the profit concept of IFRS is to convert from net income (profit or loss forthe period) to comprehensive income. In other words, there is a possibility that the technique of profit
management changes greatly (management according to the segment, etc.) by using comprehensive
income. One of the features of IFRS is the asset-liability approach. According to Shimizu (2011), IFRS
suggests the conversion "from management that values the flow to management that values thestock."12 Certainly, it tends for the statement of financial position that calculates ROE and ROA, etc.
as a financial measure to value, and to be adopted as more than a current balance sheet because theimportance of the statement of financial position increases. Therefore, this statement of financial
position will also be used as a main Key Performance Indicator according to the segment, in the future.
In addition, Kawano (2010) points out that performance measures such as operating profit, net income,ROE, ROA, economic value added (EVA), and earnings before interests, taxes, depreciation andamortization (EBITDA) cannot avoid the influence by the difference with a Japanese standard by IFRS
introduction.13 On the other hand, like Kanagaretnam et al. (2009), there are some researchers who
point out that comprehensive income correlates to stock prices or return, and net income is a forecast
factor of the profit in the future as well, thus the former cannot necessarily fix the domination.14
The possibility that the measure of the performance evaluation changes greatly is
incontrovertible if it shifts from "net income" of the dominant constraint to "comprehensive income"that is the management result of the enterprise that reflects the market value of the investor. Since thesupplement, he analyzes the differences between the Czech Republic accounting standards and IFRS based on the data of the annual reportof 2004-2005, and the case with 10 companies with revenue, net income, assets, equity capital, and liabilities analyzed.
10 Here pay-for-performance sensitivity (PPS) is a regression coefficient of the model shown by the sensitivity approach, and shows
strength that the reward synchronizes with the corporate performance by the coefficient.
11 Ozkan et al. (2012). They verified the influence given to the enterprise that did the administrative by using data from 2002 to 2008
excluding 2005 when IFRS had been compelling applied in Europe.
12
Shimizu (2011, p.105). He points out that the management method cannot help changing by the change in the concept of this income(p.106).
13 Kawano (2010, p.28). This thesis takes the standpoint that the business objective does not change at once because it does not aim at it
alone even if the income concept changes into the comprehensive income, although the introduction of IFRS influences it.
14 Kanagaretnam et al. (2009). Canadian accounting standards set by the Accounting Standards Board (AcSB) in Canada are influenced by
IASB and FASB, and these Canadian standards have features harmonized with IASB and FASB. Though it is necessary to understand afterthat is recognized, all the same, they have verified whether the stock market offers increased value relevance information, which exceeded
the traditional historical cost basis approach on companies that report the comprehensive income by applying the accounting policy of7measure of Japanese standards and that of IFRS are different, sales and profit amounts are different. As
a result, how performance measures that construct new management accounting systems of budget
management, managerial planning, and performance evaluation, etc. within the framework of IFRS
and obtains it is used, becomes important. Thus, it is necessary to change to the management technique
for taking a management action different from the situation to date how for the management
accounting related to the decision making and the performance evaluation to be going to achieve thestrategic goals as long as "comprehensive income" becomes the measure of the profitability byintroducing IFRS in the future.
Thus, as Shimizu (2011) suggests, by introducing regulations of IFRS, it is natural that
accounting standards should be converted from management that values flow to one that values thestock. It is because the management method changes by changing from the income-expense approachthat the profit concept values the profit and loss statement to the asset-liability approach that values thebalance sheet. On the other hand, Sonoda (2011) points out that IFRS has the possibility of not only
influencing the accounting side but also the management side, for instance, employees' working
changes along with the change of performance evaluation measures.15 In addition, Sakurai (2012)
insists that the bottom line can become the net income for manager's performance evaluation according
to the strategy and the decision making though it will shift from the net income that a Japanesestandard has caught up to now to the comprehensive income by the IFRS introduction.16 As Ueno
(2010) suggests, net income is the performance measure of the top management while comprehensive
income is a standard of the corporate performance measures.17

3. Sample and Inspection Method

The survey questionnaire was mailed to 813 Japanese manufacturing companies that are listedon the first section of the Tokyo Stock Exchange, and are considered innovators and market leaders intheir respective industries. The companies were grouped into 15 categories: food, apparel, chemicals,
petroleum and coal products, rubber products, ceramics, steel, non-ferrous metal, metal products,
machinery, electronics, transportation equipment, precision instruments, and other manufacturingindustries. The questionnaires were addressed to the company controller or the manager of theCanada.
15 Sonoda (2011, p.118). He indicated the importance of such management aspect in the process, which examines the influence of theapplication of IFRS on costing and management accounting.
16
Sakurai (2012, p.247). This thesis serves as a reference concerning where the influence that IFRS exerts on management accounting is
inclusively examined.
17 Ueno (2010, p.191). This paper examines not only the problem of management accounting but also critical problems such ascomprehensive income, fair value, and assets and liabilities approach, etc. regarding the process of convergence of IFRS.

8

accounting department. The questionnaire was administered between July 1 and 31, 2011. The
completed questionnaires were returned by 65 Japanese companies, constituting a response rate of 8.0
percent. The highest industry response rate was 18.2 percent for rubber products, and the lowest was
2.8 percent for metal products. It is assumed that the response rate of companies was somewhat low
because the investigation period was immediately after the great East Japan earthquake.
The survey questionnaire comprises 21 questions (31 items) relating to strategic goals, divisionalorganization, budgeting, capital investment, performance evaluation, and performance measurement.
Specifically, this thesis analyzes strategic goals, and financial and nonfinancial measures in relation to
IFRS introduction. In the next chapter, to clarify the characteristics resulting from investigating theactual conditions concerning strategic goals and performance measurement in Japanese manufacturing
companies, the relevant aspects will be empirically analyzed.
Regarding the inspection method, first, it is necessary to verify by the chi-square test (test of
independence) whether there was a difference before the introduction of IFRS on the use level ofstrategic goals, financial measures, and nonfinancial measures that Japanese firms valued. That is, it
was verified whether three high-rank answers had differing valuing level of strategic goals, financial
measures, and non-financial measures valued before and after IFRS introduction. Second, Test (t-test)of the difference of mean value of two groups and Wilcoxon code ranking sum test are carried out
based on the recovered data in order to confirm it. Moreover, use level of each item and each valuing
level of strategic goals, financial measures, and nonfinancial measures valued before and after the
introduction of IFRS will be qualitatively observed.

4. Empirical Result and Analysis
4.1 Strategy goals
This paper focuses on only strategic goals, and financial and nonfinancial measures, although
the content of the questionnaire comprises five sections. The strategic goals will be investigated in this
Chapter. How each strategic goal was valued before IFRS adoption is shown in Table 1 based on the
Likert scale (5 is greatly dissatisfied, 1 is greatly satisfied). The chi-square test (test of independence)
was carried out to verify whether the degree of the strengthening of strategic goals of Japanesecompanies differs. As a result, it was confirmed that the null hypothesis "There was no difference
between the valued strategic goals" was rejected, and the alternative hypothesis was significant at theone percent level and was supported.
Table 2 depicts the comparison between the answers of two questions. One question concerns
choosing three high ranks of strategic goals that have been valued before IFRS introduction, and the9other concerns choosing three high ranks of strategic goals valued after IFRS introduction. It is shownthat it is significant as a result of doing Test (t-test) of the difference of mean value of two groups withcorrespondence and Wilcoxon code ranking sum test based on the sample, respectively. That is, as aresult of these tests, the null hypothesis "There will not be any difference in the valued strategic goals
before and after the introduction of IFRS" was rejected at the five percent level of significance. Here,the t-value shows the statistic of the test of the difference of the mean of two groups, and the z-value
shows the statistic of Wilcoxson test, which tests the significance. Thus, it was confirmed that the two
tests were together significant at the five percent level. It is shown that there is a difference to someextent in the degree of the serious consideration of strategic goals between before and after IFRS
introduction.
The difference is caused in sales revenue and profit revenue because the rules between Japaneseand IFRS standards are different. We understand how to cause the differences in the management
accounting techniques of budget management, managerial planning, and performance evaluation, etc.
by introducing IFRS, and how the performance evaluation measures are used in addition, becomes
important. Specifically, it will be assumed that comprehensive income measures of the profitability byintroducing IFRS. This means that the management accounting technique related to current investment
decision-making and managerial planning is converted into a technique for taking a new management
activity by considering how to achieve strategic goals in the future.
Next, I will qualitatively observe Tables 1 and 2. First, 16 kinds of strategic goals wereenumerated, and the questionnaire asked how to attach importance to each goal of the enterprise by afive-stage evaluation (1-5 Likert scale) in the question investigation vote. The evaluation of eachvalued goal was requested to be shown by figures 1 to 5. The result is Table 1. Moreover, regarding
before and after IFRS, the questionnaire asks the respondents to rank the top three strategy goals fortheir firms, from among 16 managerial categories provided. Table 2 depicts these results. The main
strategic goals sequentially identified from the high rank by Table 2 include growth of earnings,
strengthening of R&D efficiency, sales growth, improvement of product qualities, etc. This survey
questionnaire's results were opposite to the forecast that sales growth (3rd rank) and growth in market
share (7th rank) had forecast, valuing more than the profit at first, although strategic goals of Japanesefirms are unlike those of American enterprises. That is, I would like to focus on the ranking of growthof earnings to first rank any more though sales growth and growth in market share are also high tosome degree as seen in Table 2. This is an evidence to value the managerial efficiency of the rate ofprofit, etc. in Japanese firms managing it. In the feature concerning this in Table 2, strengthening of
R&D ability and sales growth are ranked second and third, respectively. This is evidence suggestingthat Japanese firms have improved global competitiveness through the achievement of strengthening
technology and low-cost products.
10

When IFRS is applied, I will give the one that an important mean arose especially about
strategic goals that the enterprise chose to be a high rank as one example. That is, they are sales growth(2nd rank from 3rd rank), return on investment (4th rank from 10th rank), return on equity (11th rank from13th rank), and rationalization of the physical distribution system (12th rank from 16th rank), etc.
Within strategic goals, in addition, it is because of the evidence that the stockholder control was
made a weakness by cross-shareholdings, that the degree of serious consideration of "capital gain of
the stockholder" is low.

Table１ -Important Strategy Goals
Greatly
Dissatisfied

1
Number of respondent companies: 65
Strengthening of R&D efficiency
0 (0.0）Growth of earnings
0 （0.0）
Improvement of product quality
0 (0.0）Development of human resources
0 (0.0）
Sales growth
1 (1.5）
Improvement of public image of
0 (0.0）the company
Strengthening of marketing
0 (0.0）capability
Growth in market share
1 (1.5）Equity ratio
3 (4.6）
Improvement of product portfolio
1 (1.5）
Efficiency of physical distribution
1 (1.5）
Improvement in quality of working
0 (0.0）conditions
Efficiency of production systems
1 (1.5）
Capital gains for stockholders
0 (0.0）Return on investment (ROI)
2 (3.1)
New product ratio
4 (6.2）Moderately
Satisfied2

3

Greatly
Satisfied

4

5

No Response Mean (S. D.）

1 ( 1.5） 10（15.4） 24 （36.9）0 ( 0.0） 11（16.9） 21 (32.3）
0 ( 0.0） 10（15.4） 28 (43.1）
3 ( 4.6） 13（20.0） 29 (44.6）
2 ( 3.1） 13（20.0） 31 (47.7）
4 ( 6.2） 20（30.8） 28 (43.1）

30 (46.2）
32 (49.2）
27 (41.5）
19 (29.2）
17 (26.2）
13 (20.0）0（0.0） 4.277 (0.775）
1（1.5） 4.262 (0.916）0（0.0） 4.262 (0.708）
1（1.5） 3.938 (0.959）
1（1.5） 3.892 (0.979)0（0.0） 3.769 (0.837)

5 ( 7.7） 17（26.2） 28 (43.1）

14 (21.5)

1（1.5） 3.738 (0.985）

4 ( 6.2） 15（23.1）
4 ( 6.2） 26（40.0）
6 ( 9.2） 24（36.9）
4 ( 6.2） 33 (50.8)
8 (12.3） 28 (43.1）

35 (53.8)
24 (36.9)
28 (43.1）
22 (33.8）
24 (36.9）9 (13.8)
8 (12.3)
4 ( 6.1）
4 ( 6.2）
4 ( 6.2）

1（1.5） 3.677 (0.946）0（0.0） 3.462 (0.946）
2（3.1） 3.338 (0.997）
1（1.5） 3.323 (0.861）
1（1.5） 3.323（0.879）

5 ( 7.7） 31 (47.7）
9 (13.8） 33 (50.8）
8 (12.3) 34 (52.3）
12 (18.5） 22 (33.8）

24 (36.9）
18 (27.7）
17 (26.2）
22 (33.8）

3 ( 4.6）
5 ( 7.7）
4 ( 6.2）
4 ( 6.2）

1（1.5） 3.308 (0.858）0（0.0） 3.292 (0.799）0（0.0） 3.200 (0.845）
1（1.5） 3.108 (1.069）

Results of test of independence: Chi-square value=249.7839; Degrees of freedom=60; p-value=0.000. Cramer V=0.2463.
Significant at 1 percent level.

11

Table 2- Importance of Strategy Goals between before and after IFRS Adoption
Before IFRS
Mean Responses
Ranking
Mean

Responses

First(%) Second(%) Third(%)
Number of respondent companies: 65
Growth of earnings
1.523
Strengthening of R&D
0.877
efficiency
Sales growth
0.815
Improvement of product0.585
quality
Improvement of public
0.369
image of the company
Development of human
0.264
resources
Growth in market share
0.246
Strengthening of
0.231
marketing capability
Improvement of product0.185
portfolio
Return on investment (ROI) 0.169
Capital gains for
0.138
stockholders
New product ratio
0.092
Equity ratio
0.092
Improvement in quality
0.062
of working conditions
Efficiency of production
0.046
systems
Efficiency of physical
0.031
distribution
No response-

After IFRS
RankingFirst(%) Second(%) Third (%)

38
29

25(38.5)
10(15.4)

11(16.9) 2( 3.1)8(12.3) 11(16.9)

1.292
0.600

34
20

20(30.8)8(12.3)10(15.4)3( 4.6)4( 6.2)9(13.8)23
16

9(13.8)8(12.3)12(18.5)6( 9.2)2( 3.1)2( 3.1)

0.677
0.415

20
12

8(12.3)3( 4.6)8(12.3)9(13.8)4( 6.2)0( 0.0)105( 7.7)4( 6.2)1( 1.5)0.369

105( 7.7)4( 6.2)1( 1.5)13

1( 1.5)2( 3.1)9(13.8)0.215

101( 1.5)2( 3.1)7(10.8)12
101( 1.5)1( 1.5)2( 3.1)3( 4.6)9(13.8)6( 9.2)

0.262
0.154

11
6

1( 1.5)1( 1.5)4( 6.2)2( 3.1)6( 9.2)3( 4.6)80( 0.0)4( 6.2)4( 6.2)0.154

61( 1.5)2( 3.1)3( 4.6)7
5

1( 1.5)1( 1.5)2( 3.1)2( 3.1)4( 6.2)2( 3.1)

0.385
0.062

13
2

4( 6.2)1( 1.5)4( 6.2)0( 0.0)5( 7.7)1( 1.5)5
4
30( 0.0)0( 0.0)0( 0.0)1( 1.5)2( 3.1)1( 1.5)4( 6.2)2( 3.1)2( 3.1)

0.046
0.138
0.031

3
6
2

0( 0.0)0( 0.0)0( 0.0)0( 0.0)3( 4.6)0( 0.0)3( 4.6)3( 4.6)2( 3.1)20( 0.0)1( 1.5)1( 1.5)0.031

20( 0.0)0( 0.0)2( 3.1)10( 0.0)1( 1.5)0( 0.0)0.062

20( 0.0)2( 3.1)0( 0.0)

10

-

-

-

-

37

-

-

-

Result of test means difference; t-value=1.8237; p-value=0.0441. Significant at 5 percent level.
Wilcoxon rank sum test; z-value=2.0447. p-value=0.0409. Significant at 5 percent level.
The mean scores in the table are calculated as follows: 3 points for the most important goal, 2 for the second, and 1 for the third. For
each item, the points are multiplied by the associated number of responses, and the weighted scores are aggregated and divided by
65, the number of responding companies. The percentages are the ratio of the number of industry firms surveyed, to the number of
responding companies.

124.2 Financial measures
In the same way as strategy goals, financial measures are clarified in this section. How eachfinancial measure was valued before IFRS adoption is shown in Table 3 based on the Likert scale (5 isgreatly used, 1 is greatly not used). The chi-square test (test of independence) was carried out in orderto verify whether the degree of strengthening of financial measures of Japanese companies differs. As
a result, it was confirmed that the null hypothesis "There was no difference between the valued
financial measures" was rejected, and the alternative hypothesis was significant at 1 percent level andwas supported.
Table 4 depicts the comparisons of the two questions. One question is regarding choosing threehigh ranks of financial measures that have been valued before IFRS introduction, and the otherconcerns choosing three high ranks of financial measures valued after IFRS introduction. It is shownthat neither the t-test nor the Wilcoxon test became significant. As a result of doing the Test (t-test) of
the difference of mean of two groups with correspondence and Wilcoxon code ranking sum test basedon the sample. As a result of the t-test of the difference of mean of two groups and the Wilcoxon code
ranking sum test, the null hypothesis "There will not be any difference in the valued financial measures
before and after IFRS adoption" was not proven significant. Here, t-value shows the statistic of the testof the difference of the mean of two groups, and the z-value shows the statistic of the Wilcoxon test,
which tests the significance. Thus, it was not able to confirm that the two tests were together significant.
This shows that there is no difference at the valuing level of financial measures between before andafter IFRS adoption.
Japanese companies that refrain from IFRS introduction in the near future should clarify
measures that are not only a motivation of the action that suits the objective of the organization to the
manager, but should also support various processes. Thus, the performance management system thatbears an appropriate performance measurement and evaluation is necessary and indispensable. Further,
we should construct an accounting system that measures and evaluates useful financial performances
for the financial reporting of an outside stakeholder.
Next, I will qualitatively observe Tables 3 and 4. First, the item of 25 kinds of financial measures
was enumerated, and how each target was used was asked for each measure of the enterprise by athree-stage evaluation (1-3 Likert scale) in the question investigation vote. The evaluation of each usedmeasure was requested to be shown by the figure. Table 3 shows the result. Table 4 depicts the ranking
valued about the top three among financial measures of the performance measurement. It shows
corporate numbers and ratios according to which a specific financial measure is ranked. In Table 4, it isshown that sales volume, operating profit margin, gross margin, and growth of earnings, etc. each havea high rank. In Japan, it tends for sales volume and operating profit margin, etc. to be valued still13

because performance measurement is information that forecasts the performance level of all company
objectives of the organization. However, the point that should be focused on by this investigation is tolocate the profit or the rate of profit in the high rank, including operating profit margin. The "rate ofprofit" will show the efficiency of management in valued performance measures in the future now,
although the performance measures that the companies value are quantitative measures that show theresults of amount of profit and sales volume, etc. This shows evidence to emphasize the managerial
efficiency when companies plan the management strategy.
When IFRS is applied, I will provide as an example that an important mean arose especiallyabout strategic goals that the enterprise chose to be a high rank. That is, they are profit margin on sales(3rd rank from 5th rank), cash flow (6th rank from 11th rank), return on equity (14th rank from 18th rank),
assets turnover (17th rank from 22nd rank), and residual income (17th rank from 22nd rank), etc.

14

Table 3- Use of Financial Measures
Greatly
Moderately
not used (%) used (%)
1
2
Sales volume
1 ( 1.5)
3 ( 4.6)
Operating profit margin
1 ( 1.5)
12(18.5)
Sales growth
4 ( 6.2)
24(36.9)
Gross margin
6 ( 9.2)
17(26.2)
Cash flow
8(12.3)17(26.2)
Inventory level9(13.8)18(27.7)
Profit margin on sales (pretax)
8(12.3)23(35.4)
Growth of earnings
8(12.3)23(35.4)
Equity ratio
13(20.0)26(40.0)
Quality cost
13(20.0)29(44.6)
Contribution margin
17(26.2)
21(32.3)
Return on owners’ equity
11(16.9)36(55.4)
Cost variance17(26.2)
25(38.5)
Financing
23(35.4)
14(21.5)
Return on assets (ROA)
12(18.5)
38(58.5)
Return on equity (ROE)
16(24.6)33(50.8)
Return on investment (ROI)
12(18.5)42(64.6)
Controllable profit
24(36.9)20(30.8)
Assets turnover21(32.3)
32(49.2)
Sales per employee
24(36.9)31(47.7)
Rate of return on assets
27(41.5)29(44.6)
Cost per employee
31(47.7)
27(41.5)
Profit on economic measures
31(47.7)
28(43.1)(price earnings ratio, etc.)
Economic value added (EVA)
35(53.8)24(36.9)
Residual income
44(67.7)
17(26.2)
Others2 ( 3.1)
3 ( 4.6)

Greatly
used (%)
3
61(93.8)52(80.0)37(56.9)41(63.1)
40(61.5)
38(58.5)34(52.3)
34(52.3)
26(40.0)23(35.4)
26(40.0)18(27.7)23(35.4)
28(43.1)
15(23.1)
16(24.6)
11(16.9)19(29.2)
12(18.5)
10(15.4)9(13.8)7(10.8)6 ( 9.2)

Mean
2.923
2.785
2.508
2.508
2.492
2.446
2.400
2.400
2.200
2.154
2.108
2.108
2.092
2.077
2.046
2.000
1.985
1.862
1.862
1.785
1.723
1.631
1.615

Standard
deviation
0.319
0.447
0.611
0.726
0.704
0.724
0.697
0.697
0.748
0.728
0.843
0.659
0.779
0.882
0.643
0.702
0.595
0.875
0.699
0.690
0.691
0.670
0.649

6 ( 9.2)
4 ( 6.2)
1 ( 1.5)

1.554
1.385
0.169

0.657
0.600
0.570

Result of test of independence: Chi-square value=484.4810. Degrees of freedom=50. p-value=0.000. Cramer V=0.3859.
Significant at 1 percent level.

15

Table 4- Importance of Financial Measures between before and after IFRS Adoption
Before IFRS
After IFRS
Mean Responses
Ranking
Mean Responses
RankingFirst(%) Second(%) Third(%)
Sales volume
Operating profit margin
Gross margin
Growth of earnings
Profit margin on sales (pretax)
Cash flow
Sales growth
Return on owner’s equity
Controllable profit
Contribution margin
Return on assets (ROA)
Return on investment (ROI)
Equity ratio
Financing
Inventory level
Quality cost
Cost variance
Rate of return on assets
Return on equity (ROE)
Economic value added (EVA)
Sales per employee
Residual income
Assets turnover
Cost per employee
Profit on economic measures(price earnings ratio, etc.)
OthersNo responseFirst(%) Second(%) Third(%)

1.492
0.985
0.508
0.415
0.369
0.308
0.292
0.292
0.231
0.215
0.169
0.138
0.123
0.077
0.046
0.031
0.031
0.015
0.015
0.015
0.015
0.000
0.000
0.000
0.000

41
31
17
13
12
14
8
10
7
6
6
4
6
3
3
2
1
1
1
1
1
0
0
0
0

22(33.8)
11(16.9)
3 ( 4.6)
5 ( 7.7)
4 ( 6.2)
1 ( 1.5)
3 ( 4.6)
4 ( 6.2)
3 ( 4.6)
3 ( 4.6)
1 ( 1.5)
1 ( 1.5)0 ( 0.0)
1 ( 1.5)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)12(18.5)
11(16.9)10(15.4)
4 ( 6.2)
4 ( 6.2)
4 ( 6.2)
5 ( 7.7)
1 ( 1.5)
2 ( 3.1)
2 ( 3.1)
3 ( 4.6)
3 ( 4.6)
2 ( 3.1)0 ( 0.0)0 ( 0.0)0 ( 0.0)
1 ( 1.5)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 (0.0)0 ( 0.0)0 ( 0.0)7(10.8)9(13.8)4 ( 6.2)
4 ( 6.2)
4 ( 6.2)9(13.8)0 ( 0.0)
5 ( 7.7)
2 ( 3.1)
1 ( 1.5)
2 ( 3.1)0 ( 0.0)
4 ( 6.2)
2 ( 3.1)
3 ( 4.6)
2 ( 3.1)0 ( 0.0)
1 ( 1.5)
1 ( 1.5)
1 ( 1.5)
1 ( 1.5)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)

0.908
0.723
0.354
0.262
0.400
0.308
0.215
0.262
0.231
0.231
0.292
0.215
0.077
0.031
0.046
0.000
0.031
0.031
0.077
0.062
0.015
0.031
0.031
0.000
0.015

27
21
11
9
11
14
6
10
7
6
9
6
4
2
3
0
1
1
2
2
1
1
2
0
1

11(16.9)9(13.8)3 ( 4.6)
3 ( 4.6)
6 ( 9.2)
2 ( 3.1)
3 ( 4.6)
1 ( 1.5)
3 ( 4.6)
3 ( 4.6)
4 ( 6.2)
3 ( 4.6)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)
1 ( 1.5)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)10(15.4) 6 ( 9.2)8(12.3) 4 ( 6.2)
6 ( 9.2) 2 ( 3.1)
2 ( 3.1) 4 ( 6.2)
3 ( 4.6) 2 ( 3.1)
2 ( 3.1) 10(15.4)
2 ( 3.1) 1 ( 1.5)
5 ( 7.7) 4 ( 6.2)
2 ( 3.1) 2 ( 3.1)
3 ( 4.6) 0 ( 0.0)
2 ( 3.1) 3 ( 4.6)
2 ( 3.1) 1 ( 1.5)
1 ( 1.5) 3 ( 4.6)0 ( 0.0) 2 ( 3.1)
0 (0.0) 3 ( 4.6)0 ( 0.0) 0 ( 0.0)
1 ( 1.5) 0 ( 0.0)
1 ( 1.5) 0 ( 0.0)
1 ( 1.5) 0 ( 0.0)
2 ( 3.1) 0 ( 0.0)
0 ( 0.0) 1 ( 1.5)
1 ( 1.5) 0 ( 0.0)
0 ( 0.0) 2 ( 3.1)
0 ( 0.0) 0 ( 0.0)
0 ( 0.0) 1 ( 1.5)

0.108
0.108

3
4

2 ( 3.1)-0 ( 0.0)-1( 1.5)
-

0.108
1.046

3
35

2 ( 3.1)-0( 0.0)-1 ( 1.5)-

Result of test means difference: t-value=1.3888. p-value=0.0886. No significance.
Wilcoxon rank sum test: z-value=0.7299. p-value=0.4654. No significance.
The mean scores in the table are calculated as follows: 3 points for the most important goal, 2 for the second, and 1 for the third. For
each item, the points are multiplied by the associated number of responses, and the weighted scores are aggregated and divided by
65, the number of responding companies. The percentages are the ratio of the number of industry firms surveyed, to the number of
responding companies.

164.3 Nonfinancial measures
Nonfinancial measures are clarified in this section. How each nonfinancial measure was valued
before IFRS adoption is shown in Table 5 based on the Likert scale (5 is greatly used, 1 is greatly notused). The chi-square test (test of independence) was carried out in order to verify whether the degreeof strengthening for nonfinancial measures of Japanese companies differs. As a result, it was
confirmed that the null hypothesis "There was no difference between the valued nonfinancial
measures" was rejected, and the alternative hypothesis was significant at the 1 percent level and was
supported.
Table 6 depicts the comparison of the answers of two questions. One question concerns
choosing three high ranks of nonfinancial measures that have been valued before IFRS introduction,and the other concerns choosing those valued after. It is shown that it is significant as a result of doing
the Test (t-test) of the difference of mean value of two groups with correspondence and Wilcoxsoncode ranking sum test based on the sample. That is, as a result of the t-test of the difference of the meanvalue of two groups and the Wilcoxson code ranking sum test, the null hypothesis "There will not be
any difference in the valued nonfinancial measures before and after the introduction of IFRS" wasrejected at the 1 percent level of significance by the t-test, and rejected at the 5 percent level ofsignificance by the Wilcoxson test. Here t-value shows the statistic of the test of the difference of themean of two groups, and the z-value shows the statistic of the Wilcoxson test, which tests thesignificance. Thus, it was confirmed that the two tests were together significant at the 5 percent level. It
is shown that there is a difference to some extent in the degree of serious consideration of nonfinancial
measures between before and after IFRS introduction.
True corporate value and strength can be measured by including nonfinancial measures in thepresent accounting measurement system. Moreover, performance evaluation measures on theintelligent property value must be utilized in strategic decision making and budgeting of companies inorder to carry out effective management and proper resource allocation. Our attempt is not only to rely
on financial measures but also to add the element of nonfinancial measures, and to use it appropriately
for strategic judgment as an object of corporate value evaluation.
Next, I will qualitatively observe Tables 5 and 6. First, the item of 30 kinds of nonfinancial
measures was enumerated, and how each target was used was asked to each measure for the enterpriseby a three-stage evaluation (1-3 Likert scale) in the question investigation vote. The evaluation to eachused measure was requested to be shown by the figure. Table 5 shows the result. Then, the ranking
valued about top three among financial measures of the performance measurement is shown in Table 6,
which shows corporate numbers and ratios in which a specific financial measure is ranked. According
to Table 6, growth in market share and prediction of sales growth are relatively valued. I want to focus17

on valuing for the measures that show non-cost readership strategy like product quality, effect of
product development, and ratio of new product to sales, etc. again. Thus, it is difficult to think that thecompany's management does well even if the accounting evaluation system is constructed without theuse of the important nonfinancial measures. In other words, there is a limit in doing the management
decision making only by the financial information based on the present insufficient accounting
evaluation system. Both financial and nonfinancial measures improved further than the current
measures necessary for the manager to evaluate corporate performance. In any case, it was clarified
that it was important for companies to establish the new performance evaluation system that put in
nonfinancial measures.
When IFRS is applied, I will give the one that an important mean arose especially for the
strategic goals for which the enterprise had a high rank, as one example. That is to say, they are
customer satisfaction (3rd rank from 4th rank), inventory turnover (5th rank from 6th rank), etc.

18

Table 5- Use of Nonfinancial Measures
Greatly
Moderately
not used (%) used (%)

Product quality
Effort to achieve goals
Customer satisfaction
Growth in market share
Inventory turnover
Ratio of distribution expense to sales
Effort to achieve production planning
Total factor (labor, equipment, andraw material, etc.) productivity
Prediction of sales growth
Effect of product development
Engineering level (defect rates)
Ratio of new product to sales
Development of human resources
Output (performance) for one day
Production engineering capability(e.g., process innovation)
Register number of industrial property(e.g., intellectual estate productivity)
Degree of global environment protection
Human cost-benefit
Ratio of R&D cost to sales
R&D capability of technological experts
Important technique holding degree
SafetyJidoka of production(i.e., manufacturing automation)
Efficiency of equipment
Intangible assets
Return on investment to R&D
Order number (value) of R&D
Reduction of labor turnover
Balanced scorecard
Sales according to distributors
OthersGreatly
used (%)

Standard

1

2

3

Mean

deviation

10(15.4)8(12.3)6 ( 9.2)9(13.8)11(16.9)
11(16.9)20(30.8)
14(21.5)23(35.4)24(36.9)32(49.2)30(46.2)
27(41.5)36(55.4)
19(29.2)
32(49.2)

32(49.2)
32(49.2)
27(41.5)26(40.0)27(41.5)
18(27.7)
26(40.0)19(29.2)

2.338
2.338
2.323
2.262
2.246
2.108
2.092
2.077

0.729
0.750
0.635
0.686
0.724
0.659
0.836
0.708

15(23.1)
16(24.6)
19(29.2)
18(27.7)21(32.3)
24(36.9)18(27.7)

28(43.1)
29(44.6)
27(41.5)30(46.2)
28(43.1)
26(40.0)33(50.8)21(32.3)
19(29.2)
18(27.7)
15(23.1)
15(23.1)
15(23.1)
12(18.5)

2.062
2.015
1.954
1.892
1.877
1.862
1.846

0.782
0.774
0.793
0.787
0.775
0.762
0.749

20(30.8)30(46.2)

13(20.0)

1.831

0.776

22(33.8)20(30.8)27(41.5)23(35.4)24(36.9)26(40.0)25(38.5)30(46.2)
34(52.3)
25(38.5)30(46.2)
29(44.6)25(38.5)33(50.8)

12(18.5)
10(15.4)
13(20.0)11(16.9)
11(16.9)
12(18.5)
6 ( 9.2)

1.815
1.815
1.785
1.785
1.769
1.723
1.677

0.742
0.699
0.754
0.734
0.739
0.794
0.659

32(49.2)
35(53.8)
37(56.9)38(58.5)
43(66.2)
43(66.2)
45(69.2)
6 ( 9.2)30(46.2)
28(43.1)
25(38.5)21(32.3)
20(30.8)
14(21.5)
14(21.5)
1 ( 1.5)

2 ( 3.1)
1 ( 1.5)
2 ( 3.1)
4 ( 6.2)
2 ( 3.1)
6 ( 9.2)
5 ( 7.7)0 ( 0.0)

1.508
1.446
1.431
1.415
1.369
1.369
1.354
0.123

0.585
0.556
0.581
0.654
0.543
0.692
0.643
0.372

Result of test of independence: Chi-square value=352.5919. Degrees of freedom=60. p-value=0.000. Cramer V=0.3022.
Significant at 1 percent level.

19

Table 6 - Importance of Nonfinancial Measures between before and after IFRS Adoption
Before IFRS
After IFRS
Mean Responses
Ranking
Mean Responses
RankingFirst(%) Second(%) Third(%)
Growth in market share
Product quality
Prediction of sales growth
Customer satisfaction
Effect of product development
Effort to achieve goals
Inventory turnover
Ratio of distribution expense to sales
Effort to achieve production planning
Total factor (labor, equipment, andraw material, etc.) productivity
Ratio of new product to sales
Engineering level (defect rates)
Output (performance) for one day
Balanced scorecard
Ratio of R&D cost to sales
Production engineering capability(e.g., process innovation)
SafetyDegree of global environment
protection
R&D capability of technologicalexperts
Sales according to distributors
Return on investment to R&D
Important technique holding degree
Development of human resources
Human cost-benefit
Intangible assets
Jidoka of production(i.e., manufacturing automation)
Order number (value) of R&D
Register number of industrial property(e.g., intellectual estate productivity)
Efficiency of equipment
Reduction of labor turnover
OthersNo responseFirst(%) Second(%) Third(%)

0.969
0.862
0.492
0.477
0.431
0.385
0.308
0.262
0.185
0.169

27
2
14
14
14
13
10
10
7
6

16(24.6)
10(15.4)
6 ( 9.2)7(10.8)5 ( 7.7)
5 ( 7.7)
3 ( 4.6)
1 ( 1.5)0 ( 0.0)
2 ( 3.1)

4 ( 6.2)
11(16.9)
6 ( 9.2)
3 ( 4.6)
4 ( 6.2)
2 ( 3.1)
4 ( 6.2)
5 ( 7.7)
5 ( 7.7)
1 ( 1.5)7(10.8)4 ( 6.2)
2 ( 3.1)
4 ( 6.2)
5 ( 7.7)
6 ( 9.2)
3 ( 4.6)
4 ( 6.2)
2 ( 3.1)
3 ( 4.6)

0.815
0.615
0.415
0.508
0.200
0.323
0.323
0.215
0.077
0.123

22
18
12
13
7
11
11
8
3
5

13(20.0)7(10.8)5 ( 7.7)8(12.3)2 ( 3.1)
4 ( 6.2)
3 ( 4.6)
2 ( 3.1)0 ( 0.0)
1 ( 1.5)

5 ( 7.7)8(12.3)5 ( 7.7)
4 ( 6.2)
2 ( 3.1)
2 ( 3.1)
4 ( 6.2)
2 ( 3.1)
2 ( 3.1)
1 ( 1.5)

4 ( 6.2)
3 ( 4.6)
2 ( 3.1)
1 ( 1.5)
3 ( 4.6)
5 ( 7.7)
4 ( 6.2)
4 ( 6.2)
1 ( 1.5)
3 ( 4.6)

0.154
0.154
0.108
0.092
0.077
0.077

6
6
4
2
2
3

1 ( 1.5)0 ( 0.0)
1 ( 1.5)
2 ( 3.1)
1 ( 1.5)0 ( 0.0)

2 ( 3.1)
4 ( 6.2)
1 ( 1.5)0 ( 0.0)
1 ( 1.5)
2 ( 3.1)

3 ( 4.6)
2 ( 3.1)
2 ( 3.1)0 ( 0.0)0 ( 0.0)
1 ( 1.5)

0.154
0.092
0.046
0.108
0.092
0.000

6
3
2
3
3
0

1 ( 1.5)0 ( 0.0)0 ( 0.0)
2 ( 3.1)
1 ( 1.5)0 ( 0.0)

2 ( 3.1)
3 ( 4.6)
1 ( 1.5)0 ( 0.0)
1 ( 1.5)0 ( 0.0)

3 ( 4.6)0 ( 0.0)
1 ( 1.5)
1 ( 1.5)
1 ( 1.5)0 ( 0.0)

0.077
0.062

3
2

0 ( 0.0)
1 ( 1.5)

2 ( 3.1)0 ( 0.0)

1 ( 1.5) 0.062
1 ( 1.5) 0.062

22

0 ( 0.0)
1 ( 1.5)

2 ( 3.1)0 ( 0.0)0 ( 0.0)
1 ( 1.5)

0.046

20 ( 0.0)

1 ( 1.5)

1 ( 1.5) 0.046

2

0 ( 0.0)

1 ( 1.5)

1 ( 1.5)

0.046
0.031
0.031
0.031
0.015
0.015
0.015

2
2
1
2
1
1
1

0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)

1 ( 1.5)0 ( 0.0)
1 ( 1.5)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)

1 ( 1.5)
2 ( 3.1)0 ( 0.0)
2 ( 3.1)
1 ( 1.5)
1 ( 1.5)
1 ( 1.5)

0.031
0.077
0.046
0.062
0.000
0.015
0.031

2
3
2
3
0
1
1

0 ( 0.0)
1 ( 1.5)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)
1 ( 1.5)
1 ( 1.5)0 ( 0.0)0 ( 0.0)
1 ( 1.5)

2 ( 3.1)
2 ( 3.1)
1 ( 1.5)
2 ( 3.1)0 ( 0.0)
1 ( 1.5)0 ( 0.0)

0.000
0.000

0
0

0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0) 0.000
0 ( 0.0) 0.000

00

0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)0 ( 0.0)

0.000
0.000
0.000
0.431

0
0
0
15

0 ( 0.0)0 ( 0.0)0 ( 0.0)-0 ( 0.0)0 ( 0.0)0 ( 0.0)-0 ( 0.0)0 ( 0.0)0 ( 0.0)
-

0
0
0
48

0 ( 0.0)0 ( 0.0)0 ( 0.0)-0 ( 0.0)0 ( 0.0)0 ( 0.0)-0 ( 0.0)0 ( 0.0)0 ( 0.0)
-

0.000
0.000
0.000
1.446

Result of test means difference; t-value=2.7974. p-value=0.0049. Significant at 1 percent level.
Wilcoxon rank sum test; z-value=2.1899. p-value=0.0285. Significant at 5 percent level.
The mean scores in the table are calculated as follows: 3 points for the most important goal, 2 for the second, and 1 for the third. For
each item, the points are multiplied by the associated number of responses, and the weighted scores are aggregated and divided by
65, the number of responding companies. The percentages are the ratio of the number of industry firms surveyed to the number of
responding companies.

20

5. Summary and Conclusions
This paper searches for the trend and the feature concerning IFRS, and has analyzed what
influence the introduction of IFRS exerts on the business strategy and performance measures ofmanagement accounting. Specifically, after introducing IFRS, I clarified how the importance ofstrategic goals of the companies, financial measures, and nonfinancial measures change through themailing question investigation to Japanese companies, and did empirical analyses on how IFRS
influenced various measures. It is thought that the clarification of the hypothesis concerning some
performance evaluation systems through a statistical verification contributes to IFRS measures ofJapanese manufacturing companies in the future. It is understood that the adoption of IFRS becomes
an extremely strategic accounting initiative for Japanese companies as a result of the analysis.
As the features of IFRS, the conversion to the approach of (1) principle base, (2) assets-liabilities
approach, and (3) fair value accounting can be pointed out. Specifically, if IFRS is introduced,
comprehensive income will be adopted as the main performance measure, although Japanesecompanies have taken the standpoint where the final achievement is displayed by net profit up to now.
Therefore, it is necessary to reflect the profit of the stock that shows market quotation of the property
that the enterprise has. In short, the comprehensive income comprises the addition of the change of fairvalue of the cross-holding of shares and the change of the exchange of net assets, etc. the overseas
subsidiary had to net profit. Specifically, such a new income concept of IFRS is an idea assumed to be"Value change of the risk property by which the cash flow that the enterprise will invent in the future
influences it."18
By IFRS adoption, evaluation and measurement rule of the corporate performance may greatlychange. Of course, sales of the product shift from shipment standard to arrival standard of goods, andselection application for depreciation is admitted. However, several restrictions exist, as it will benecessary to forecast the economic convenience in the future of the property. On the other hand, it islikely to arise also from the advantage of becoming easy to grasp and compare financial situations ofcompanies by using a common standard, and easy to make a funding, M&A in foreign countries or a
strategic plan.
Consequently, the possibility that the change appears obviously is incontrovertible to the current
corporate strategy and performance evaluation. In this paper, being possible to verify it statistically wasan important discovery when there was a difference in corporate strategic goals and performance
18 Nikkei Business (2010 p.26). By introducing IFRS, net income and income before extraordinary items disappears from the financial

statements of Japanese companies, and a new income concept of comprehensive income will be displayed as one of the features. It comes
for the enterprise to make the financial position more conspicuous, and to accomplish a new accountability to the management result byusing this income concept.

21

measurement measures after IFRS adoption. Surely, assuming that the importance of corporate
strategic goals, financial measures, and nonfinancial measures changed before and after IFRS adoption
and having analyzed it were significant. As a result, it was not confirmed that the tendency (difference)
to value financial measures after IFRS adoption was statistically significant. However, there is asignificant meaning in the implication of this study that the hypothesis about strategic goals andnon-financial measures was obviously supported.
It is necessary to examine IFRS carefully to understand what influence is exerted on theaccounting practice by its introduction, not only with respect to strategic goals and performancemeasurement measures, but also for other management accounting techniques such as capital
investment and budget management, or research and development investment and international
taxation, etc. I would like to suggest these as potential research subjects in the future.

Acknowledgments
I appreciate the helpful comments of the seminar participants at Ritsumeican University, Nagoya
City University in Japan. I also benefited from discussions with session participants at 27th
Asian-Pacific Conference on International Accounting Issues. This work was supported by
Grant-in-Aid for Scientific Research (C) of JSPS KAKENHI Grant Number 16K04016.

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