Book Reviews: A History of British Financial Accounting

Article excerpt

Junichi Chiba, A History of British Financial Accounting [in Japanese] (Tokyo: Chuo Keizai, 1992, 407 pp., 7,000 Yen).

Reviewed by Yozo Sakaguchi Case Western Reserve University

When Japan reopened its commerce to the United States of America in 1854, its doors had been closed to foreign countries for more than two hundred years. Needless to say, at that time, there was no bookkeeping or accounting system in Japan that was similar to those used today. But during the Meiji era (1876-1911), Japan's economy developed, expanded and encompassed almost every type of industry. Under these circumstances, Japanese financial systems that were primarily influenced by British financial accounting followed a European-style commercial code. Thus, until the early 20th century, the British system was the major influence on Japanese accounting.

This was the situation in Japan until after World War II, when a Japanese securities and exchange law was enacted which was strongly influenced by the U.S. Securities Acts. As a result, Japan's accounting system rapidly changed under the influence of the U.S. financial accounting system and the Securities Acts. Thus, two major external influences affected the basic framework of Japanese financial accounting.

From these two influences, Professor Chiba considers issues about social and historical problems in modern Japanese financial accounting, focusing on the influences of British financial accounting, the need to earn public trust, and the impact of political issues, which Chiba analyzes from a social science approach. He focuses primarily on the important period from the beginning of the 19th century through the 20th century.

The book contains ten sections. Sections 1 and 2 seek to define a basic structure for the British financial accounting approach using a social science methodology. The effects of passage of the modern Companies Act and of related accounts based on British processes is examined in sections 3 and 4; the "Lee Rule" is examined in sections 5 and 6. The accounting system under the British Companies Acts during a period of interventionism is the focus of sections 7, 8, and 9. Finally, the "true and fair" view is considered in the last section. Each of the sections is effectively related with others by the author's use of social science and economic historical perspectives. …