Reviewed by Lawrence R. Hudack North Texas State University
The author’s stated and attained objectives are to trace the development of Japanese corporate reporting regulation and to determine the operational form of the current regulatory sys-tem. While attaining these objectives, she offers a relatively unique perspective on international accounting research.
The author adopts a refreshing and liberal attitude with respect to this complex and dynamic topic. Contrary to con-temporary accounting research’s fixation with traditional functionalist epistemological premises, a subjectivist approach is considered and applied. An argument against the former illustrates how the researcher is often forced into making overly simplistic analyses of social science phenomena, thereby resulting in limited and often questionable findings. The subjectivist perspective allows for consideration of qualitative characteristics which are often prevalent in the examination of social systems.
A major contribution to international accounting research is provided by the introduction and adaptation of Anthony D. Smith’s sociological framework. Prior to this work, the aforementioned research was in search of a suitable model for nation specific studies. In accordance with the FASB, the author explicitly assumes that the regulation process is to be recognized as a dynamic social system, thereby allowing Smith’s “modified exogenous framework of processual change analysis” to provide a viable analytic framework.
This framework recognizes internal, external and interacting factors of processual change; decomposes processual change into source phase, diffusion phase, and reaction phase; and analyzes processual change in terms of four major aspects. These four aspects include: environment, intrusive events, intra-system activity, and trans-systems activity.
This broad-minded interpretive framework is consistent with Issaih Berlin’s prerequisite of an historical analysis focusing upon interwoven strands of the texture rather than narrow examinations of isolated strands of experience. In accordance with Berlin’s concept of history, the study exhibits an exceptional capacity to associate, e.g., recognition of environ-ment and inter-systems activity.
An effective research strategy which synthesizes existing literature and personal interviews of experts enables the ac-cumulation and dissemination of five “central response events”. The five events are then used as “insight-stimulating” examples in the historical and environmentatl analysis of the Japanese corporate financial reporting regulation system. The author acknowledges Fujita’s (Yukio) doctoral thesis “An Analysis of the Development and Nature of Accounting Principles in Japan” (1968), and R. J. Ballon, Tomita Iwao and Usami Hajime’s Financial Reporting in Japan (1976) as important literary sources. The interview respondents include Japanese regulators, academics, and certified public accountants who provide “an inductive argument from authority” in the selection of the following events: introduction to the Commercial Code (1899), issuance of working rules (1934) and tentative standards (1941), introduction of the Securities Exchange Law (1948), revision of the Commercial Code (1974), and issuances of ministerial ordinances on consolidation (1976).
An overview of the book’s contents reveals that a general to specific pattern is employed. The first three chapters incorporate a general perspective offering anyone with an interest in international accounting reseach some valuable insights. Chapters four and five focus the reader’s attention toward a rather informative Japanese specific historical and environmental background of corporate reporting regulation. Chapters six through ten provide a magnified illustration of the Japanese system’s historical development and environmental influences through the application of Smith’s “modified exogenous framework of processual change analysis” to each of five “central response events”. The final chapter offers both conclusions relating to the Japanese system’s operational form and implications for future research. The conclusions delineate the system’s authorities and mechanisms’ social status and functions, and interactivity among authorities in the process of administering, formulating and implementing corporate reporting regulation. The implications circumscribe the international interpretation of accounting and corporate reporting, international transferability of accounting principles and practices, and transferability of “regulation research”. In addition, a rather comprehensive bibliography and informative appendices help to enrich this truly significant contribution.
The only potentially negative aspect of this work is the conclusions involving interactivity among authorities. Under-lying these conclusions is the presence of corporate resistance, an anomaly which is contrary to an earlier discussion of the Japanese cultural environment’s acceptance of “moral basis of government,” “the ruler and the ruled,” and societal inter-dependence. Althought an “explanation” is provided for corporate resistance’s existence, the reader may be left with some doubts because of an apparent inconsistency. However, one must not lose sight of the interpretive (subjectivist) epis-temological perspective employed.
In sum, this book should be recognized as a significant contribution to international accounting and historical re-search; both for its general future research implications and specific informative presentation of Japanese corporate re-porting regulation.
