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Study cites efficiency in business management and enhanced comparability as two main reasons for adoption of IFRS by Japanese companies

 01 May 2015


 

The Japanese Financial Services Agency (FSA) this week published an English translation of the results of a study on the voluntary adoption of IFRS in Japan.

Since 2010, Japanese companies have been able to voluntarily elect to report using IFRS as issued by the IASB.  In the last two years, the number of Japanese companies choosing to adopt IFRS has doubled.  As of March 2015, 75 companies have adopted or announced their intention to adopt IFRS, with those companies representing 18.5% of the total market capitalisation of the Tokyo Stock Exchange.  That number is expected to increase to more than 100 companies by the end of 2015, representing greater than 20% of total market capitalisation.

The Japanese FSA conducted a fact-finding survey to study the reasons why Japanese companies have voluntary adopted IFRS, and how the transitional challenges have been overcome.

The study reports the following reasons for Japanese companies deciding to adopt IFRS:

  1. Efficiency in business management
  2. Enhanced comparability with competitors
  3. Better communication with international investors
  4. Better describes business performance
  5. Facilitates greater access to international finance 

Hans Hoogervorst, Chairman of the International Accounting Standards Board, commented:

"The voluntary nature of IFRS usage in Japan means that this report provides very useful insight into the cost/benefit evaluation undertaken by major Japanese companies before deciding to proceed with IFRS.

It is encouraging to see so many Japanese companies recognising the substantial benefits that come with using IFRS as the globally recognised set of accounting standards.”

View the press release by Japanese FSA on the Publication of ‘IFRS Adoption Report’.


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Mark Byatt, Director of Communications and External Affairs, IFRS Foundation
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Email: mbyatt@ifrs.org

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