The evolution of financial reporting in Japan: a shame culture perspective

Abstract

This paper discusses the evolution of financial reporting in Japan from approximately 1850 to date and considers whether developments have been influenced by its shame culture. Double-entry bookkeeping developed, in part, as a result of the political, economic and social changes introduced in the early Meiji period. Of great significance was the development of the limited liability company, a form of business organization advocated by government with considerable alacrity which was not recognized in law until the 1899 Commercial Code. A major change in the financial reporting environment occurred after the Second World War as a result of the democratization programme introduced by the Allied Forces, mainly the US. While the regulatory framework imposed upon Japan has been modified somewhat, the nucleus remains intact.