Most Japanese corporations will begin using consolidated accounts to calculate their business results for the term ended March 2000 and disclose their cash flow. They will thus be revealing their real, naked strengths. For Japanese industry, this event marks a historic turning point. Introduction of the new accounting standards came about because the results disclosed by Japanese corporations using the older standards were no longer trusted by the international community. In 1998 Japanese stocks fell across the board because people suspected that even healthy corporations were hiding losses in their published financial accounts.
Standards established by the private-sector is a worldwide trend.
It is the path that Britain, Germany, the United States, and other industrial nations have taken. Now Japan is about to follow suit. Because the rules are undergoing a radical transformation, it will also have a large impact on corporate operations and management. In essence, it will trigger a Big Bang in corporate governance. Toyo Keizai, April 22, 2000.