The legal backing for accounting standard-setting in Japan: A historical review

Abstract

The purpose of this study is to construct a historical narrative of the development of the standard-setting in Japan, where the main standard-setting bodies were changed from public to private sector entities. This study specifically examines the unique coexistence of four sets of accounting standards through the lens of legality. My findings show that four sets of accounting standards are formalized into the domestic legal system through the endorsement by the Financial Services Agency of Japan, although differences in the standard-setting processes and patterns of public delegation exist. This finding also suggests an interesting example of hybridization between legally incomplete ex ante delegation to private sector standard-setting bodies and ex post endorsement by the public sector.