Five Reasons why Japanese Companies are Adopting IFRS
The Japanese Financial Services Agency (FSA) has published an English translation of the results of a study on the voluntary adoption of international financial reporting standards (IFRS) in Japan.
Since 2010, Japanese companies have been able to voluntarily elect to report using IFRS as issued by the International Accounting Standards Board (IASB). In the past 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 (TSE). That number is expected to increase to more than 100 companies by the end this year, 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:
“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,” said IASB chairman Hans Hoogervorst.
“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.”