Implementation of IFRS in Japan: An Analysis of Voluntary Adoption by Listed Firms

Abstract

Since 2010 Japanese listed firms can voluntarily use international financial reporting standards for their consolidated financial statements. Using financial and non-financial data, we carry out a comprehensive research into the adopters’ determinants. We employ a multi-period logit model that considers every annual decision made along the period 2010-2019. We find that the having outside networks through subsidiaries and a strong internal corporate governance system are key factors. We also confirm a contagion effect. Finally, our results suggest that goodwill is also relevant, since only Japanese accounting standards require annual amortization.

Keywords: IFRS adoption, reporting incentives, internationalization, network effect, contagion effect, mimetic isomorphism, Japan

JEL Classification: G38, M48