Course Title: Professional Doctorate in Business Administration (Research)

Thesis Title: De facto Harmonisation and the Impacts of Legal Origins on IFRS Reporting Practices among Japanese Subsidiary Companies in Australia: Isomorphism or Decoupling?

Supervisors: Dr Jesmin Islam and Dr Suneeta Sathye

Abstract: 

Corporate financial reporting is subject to the national accounting standards of the country in which the corporation is constituted. Currently more than a hundred countries already use a single set of international accounting standards, namely the International Financial Reporting Standards (IFRS). The benefits of IFRS are to improve comparability and reliability of financial statements across countries, and to reduce costs and risks associated with international businesses and investments. Australia adopted IFRS as of 1 January 2005, and all entities in Australia are required to prepare IFRS financial reporting.

However, literature in international accounting suggests that because each country has its own political, economic and cultural systems, it is sometimes inappropriate to apply the Anglo-American model of IFRS to all countries. In the dichotomous classifications developed by La Porta et al. (1997), Australia is categorised as a common-law country which has substantial investor protection by law, with a market based economy. On the other hand, Japan is classified as a German code-law legal origin country, which generally has a strong political influence on accounting regulations, and where the primary users of financial statements are government, banks and creditors. Ball et al. (2000) find that the level of accounting quality is significantly higher in common -law countries than in code-law countries. Indeed, in their study of Canada, the U.S., the U.K., France, Germany, Australia and Japan, the timeliness of earnings recognition is the second highest in Australia, while Japan is the dramatically lowest within the seven developed countries.

The aim of this study is to investigate the impacts of different legal origins and institutional settings among Japanese (code-law legal origin) subsidiary companies operating businesses in Australia’s common-law institutional settings. If the levels of earnings management among Japanese subsidiary companies are the same line as those of Australian companies, it would be considered that the IFRS approach under the Australian institutions would be effective to reduce the effects of dissimilar legal origin, and to standardise the approach to include foreign-owned companies. The study will also explore opinions through a mail survey questionnaire to all Japanese subsidiary companies in Australia. This actual
experience of respondents would be expected to enhance knowledge with respect to the realities of business operations in overseas subsidiaries and to support the quantitative findings.

Short Bio:

Sachiko Sugiyama has been currently undertaking a Professional Doctorate in Business Administration. Prior to this, Sachiko worked as a qualified real estate agent for five years in Japan. In 2008, she completed a Bachelor of Commerce in accounting at Griffith University, received a Griffith Award for Academic Excellence 2007 for students who had achieved a top five per cent in the university. She graduated with a Master of Financial Management at the Australian National University in 2009.