On the basis of an analytical framework of New Institutional Sociology (NIS), this study examines the transformation from cash-based to accrual-based accounting systems among Japanese local governments since the 1990s. The analysis indicates that their accounting reforms stem from socio-political interactions among related actors. These actors were Japan’s local governments and the national government as represented by ministries involved in the administration of local governments, such as the Ministry of Internal Affairs and Communications (MIC) and the Ministry of Finance. This analysis shows that NIS in general, and the concept of coercive isomorphism in particular, provide capable explanations for local governments’ widespread adoption of a modified model recommended by the MIC. In addition, the concept of decoupling explains well the lower perceived utility of accrual accounting information in managing the finances of local governments.
AndrianiYKoberRNgJ (2010) Decision usefulness of cash and accrual information: public sector managers’ perceptions. Australian Accounting Review20(2): 144–153.
2.
AsanoSKitagawaHHashimotoD (2002) Governors Change Japan. Tokyo: Bungenshunjyu (in Japanese).
3.
BallI (2012) New development: Transparency in the public sector, Public Money and Management32(1): 35–40.
4.
BartonA (2009) The use and abuse of accounting in the public sector financial management reform program in Australia. Abacus45(2): 221–248.
5.
BattilanaJLecaBBoxenbaumE (2009) How actors change institutions: Towards a theory of institutional entrepreneurship. The Academy of Management Annals3(1): 65–107.
6.
BealingWDirsmithMWFogartyT (1996) Early regulatory actions by the SEC: An institutional theory perspective on the dramaturgy of political exchanges. Accounting, Organizations and Society21(4): 317–338.
7.
BeckettJ (1999) Agency, entrepreneurs, and institutional change, the role of strategic choice and institutionalized practices in organizations. Organizational Studies20(5): 777–799.
8.
BroadbentJGuthrieJ (2008) Public sector to public services: 20 years of “contextual” accounting research. Accounting, Auditing and Accountability Journal, 21(1): 129–169.
CarmonaSDonosoR (2004) Cost accounting in early regulated markets: The case of the Royal Soap Factory of Seville (1525–1692). Journal of Accounting & Public Policy23(2): 129–157.
11.
CarmonaSMaciasM (2001) Institutional pressures, monopolistic conditions and the implementation of early cost management practices: The case of the Royal Tobacco Factory of Seville (1820–1887). Abacus37(2): 139–165.
12.
CarmonaSEzzamelMGutierrezF (1998) Towards an institutional analysis of accounting change in the Royal Tobacco Factory of Seville. Accounting Historians Journal25(1): 115–147.
13.
CarpenterVLFerozEH (2001) Institutional theory and accounting rule choice: An analysis of four US state governments’ decisions to adopt generally accepted accounting principles. Accounting, Organizations and Society26(7/8): 565–596.
14.
CarruthersBG (1995) Accounting, ambiguity and the new institutionalism. Accounting, Organizations and Society20(4): 313–328.
15.
ChristensenMParkerL (2010) Using ideas to advance professions: Public sector accrual accounting. Financial Accountability & Management26(3): 246–266.
16.
CollinSOTagessonYTAnderssonACatoJHanssonK (2009) Explaining the choice of accounting standards in municipal corporations: positive accounting theory and institutional theory as competitive or concurrent theories. Critical Perspective on Accounting20(2): 141–174.
17.
CovaleskiMADirsmithMW (1988) The use of budgetary symbols in the political arena: An historically informed field study. Accounting, Organizations and Society13(1): 1–24.
18.
DacinMTGoodsteinJScottWR (2002) Institutional theory and institutional change: Introduction to the special research forum. Academy of Management Journal45(1): 45–56.
19.
DiMaggioPJ (1988) Interest and agency in institutional theory. In: ZuckerLG (ed.) Institutional Patterns and Organizations. Cambridge: Ballinger, pp.3–21.
20.
DiMaggioPJPowellWW (1983) The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review48(2): 147–160.
21.
DiMaggioPJPowellWW (1991) Introduction. In: PowellWWDiMaggioPJ (eds) The New Institutionalism in Organizational Analysis. Chicago: University of Chicago Press, pp.1–33.
22.
DurandRMcGuireJ (2005) Legitimating agencies in the face of selection: The case of AACSB. Organization Studies26(2): 165–196.
23.
EzzamelMHyndmanNJohnsenALapsleyIPallotJ (2007) Experiencing institutionalization: The development of new budgets in the UK devolved bodies. Accounting, Auditing & Accountability Journal20(1): 11–40.
24.
FalkmanPTagessonT (2008) Accrual accounting does not necessarily mean accrual accounting: Factors that counteract compliance with accounting standards in Swedish municipal accounting. Scandinavian Journal of Management24(3): 271–283.
25.
GeigerDRIttnerCD (1996) The influence of funding source and legislative requirements on government cost accounting practices. Accounting, Organizations and Society21(6): 549–567.
26.
GoddardA (2010) Contemporary public sector accounting research – an international comparison of journal papers. British Accounting Review42(1): 75–87.
27.
GomesDCarnegieGDRodriguesLL (2008) Accounting change in central government: The adoption of double-entry bookkeeping at the Portuguese Royal Treasury (1761). Accounting, Auditing & Accountability Journal28(8): 1144–1184.
28.
GreenwoodRSuddabyR (2006) Institutional entrepreneurship in mature fields; the big five accounting firms. Academy of Management Journal49(1): 27–48.
29.
GreenwoodRSuddabyRHiningsCR (2002) Theorizing change: The role of professional associations in the transformation of institutionalized fields. Academy of Management Journal45(1): 58–80.
30.
HoodC (1991) A public management for all seasons?Public Administration69(1): 3–19.
31.
HusseinME (1981) The innovative process in financial accounting standards setting. Accounting, Organizations and Society6(1): 27–37.
32.
HyndmanNConnollyC (2011) Accruals accounting in the public sector: A road not always taken. Management Accounting Research22(1): 36–45.
33.
IrvineH (2011) From go to woe: How a not-for-profit managed the change to accrual accounting. Accounting, Auditing & Accountability Journal24(7): 824–847.
34.
JacksonALapsleyI (2003) The diffusion of accounting practices in the new “managerial” public sector. The International Journal of Public Sector Management16(4/5): 359–372.
35.
JacobsK (2012) Making sense of social practice: Theoretical pluralism in public sector accounting research. Financial Accountability & Management28(1): 1–25.
36.
JagallaTBeckerSDWeberJ (2011) A taxonomy of the perceived benefits of accrual accounting and budgeting: Evidence from German states. Financial Accountability and Management27(2): 134–165.
37.
JonesR (1991) Comparative governmental accounting research. Staatswissenschaften und Staatpraxis4(2): 548–552.
38.
JonesSPuglisiN (1997) The relevance of AAS 29 to the Australian public sector: A cause for doubt?Abacus33(1): 1–18.
39.
JorgeSCaperchioneEJonesR (2011) Introduction to Volume 4: Comparative international governmental accounting research (CIGAR): Bridging researching and networking. In: JonesR (ed.) Public Sector Accounting. Thousand Oaks, CA: Sage.
40.
KasperskayaY (2008) Implementing the balanced scorecard: A comparative study of two Spanish city councils – an institutional perspective. Financial Accountability & Management24(4): 363–384.
41.
KhanAMayesS (2009) Transition to Accrual Accounting. Washington DC: IMF.
42.
KingdonJW (1984) Agendas, Alternatives, and Public Policies. Boston: Little Brown and Co.
43.
KobayashiMYamamotoKIshikawaK (2011) Usefulness of accrual information in non-mandatory environment: The case of Japanese local government. Unpublished Manuscript.
44.
KoberRLeeJNgJ (2010) Mind your accruals: Perceived usefulness of financial information in the Australian public sector under different accounting systems. Financial Accountability & Management26(3): 267–298.
45.
LandeE (2006) Accrual accounting in the public sector: Between institutional competitiveness and the search for legitimacy. In: LandeEScheidJC (eds) Accounting Reform in the Public Sector: Mimicry, Fad or Necessity. Paris: Experts Comptables Media.
46.
LandeERocherS (2011) Prerequisites for applying accrual accounting in the public sector. Public Money & Management31(3): 219–222.
47.
LapsleyIMussariRPaulssonG (2009) On the adoption of accrual accounting in the public sector: A self-evident and problematic reform. European Accounting Review18(4): 719–723.
48.
LaughlinR (2012) Debate: Accrual accounting: Information for accountability or decision usefulness?Public Money & Management32(1): 45–46.
49.
LawrenceTBHardyCPhillipsN (2002) Institutional effects of interorganizational collaboration: The emergence of proto-institutions. Academy of Management Journal45(1): 281–290.
50.
LecaBBattilanaJBoxenbaumE (2008) Agency and institutions: A review of institutional entrepreneurship. Harvard Business School Working Papers. 08–096.
51.
LiguoriM (2012) Radical change, accounting and public sector reforms: A comparison of Italian and Canadian municipalities. Financial Accountability & Management28(4): 437–463.
52.
Local Finance Bureau of the MIC (2007) Q&A about “The standard and modified models concerning the preparation of the financial statements by the local governments”, Ministry of Internal Affairs and Communications.
53.
LüderK (1992) A contingency model of government accounting innovations in the political-administrative environment. Research in Governmental and Nonprofit Accounting7: 99–127.
54.
MaguireSHardyC (2006) The emergence of new global institutions: A discursive perspective. Organization Studies27(1): 7–29.
55.
MaguireSHardyCLawrenceTB (2004) Institutional entrepreneurship in emerging fields: HIV/AIDS treatment advocacy in Canada. Academy of Management Journal47(5): 657–679.
56.
MarkowitzL (2007) Structural innovators and core-framing tasks: How socially responsible mutual fund companies build identity among investors. Sociological Perspectives50(1): 131–153.
57.
MattissonONäsiSTagessonT (2004) Accounting innovations in the public sector. In: 27th Annual Congress of the European Accounting Associations. Prague.
58.
MeyerJWRowanB (1977/1991) Institutionalised organizations: Formal structures as myth and ceremony. American Journal of Sociology83(2): 310–363. Reprinted in: PowellWWDiMaggioPJ (eds) The New Institutionalism in Organizational Analysis. Chicago: University of Chicago Press, pp.41–62.
59.
Ministry of Internal Affairs and Communications (MIC) (2012a) Material for the 16th Meeting at the Research Committee for Promoting Public Sector Accounting Reform.
60.
Ministry of Internal Affairs and Communications (MIC) (2012b) Press information: The situation in the local governments of the preparation of the financial statements for 2010, Ministry of Internal Affairs and Communications: 1–9.
61.
MisangyiVFWeaverGRElmsH (2008) Ending corruption: The interplay among institutional logics, resources, and institutional entrepreneurs. Academy of Management Review33(3): 750–770.
62.
ModellS (2009a) Institutional research on performance measurement and management in the public sector accounting literature: A review and assessment. Financial Accountability & Management25(3): 277–303.
63.
ModellS (2009b) In defence of triangulation: a critical realist approach to mixed methods research in management accounting. Management Accounting Research20(3): 208–221.
64.
ModellS (2010) Bridging the paradigm divide in management accounting research: The role of mixed methods approaches. Management Accounting Research21(2): 124–129.
65.
ModellS (2013) Making sense of social practice: Theoretical pluralism in public sector accounting research: A comment. Financial Accountability & Management29(1): 99–110.
66.
MOF (1963) Research on Double Entry Bookkeeping of Government Accounting. Unpublished report (in Japanese).
67.
NakamuraA (2012) Asian model of government re-examined in the aftermath of the global economic crunch: A Japanese perspective from the experience of the triple disasters in March 2011. International Review of Administrative Sciences78(2): 239–259.
68.
OlsonOGuthrieJHumphreyC (1998) Global Warning: Debating International Developments in New Public Financial Management. Oslo: Cappelen Akademisk Forlag.
69.
PhillipsNLawrenceTBHardyC (2000) Inter-organizational collaboration and the dynamics of institutional fields. Journal of Management Studies37(1): 23–44.
70.
PinaVTorresLYetanoA (2009) Accrual accounting in EU local governments: One method, several approaches. European Accounting Review18(4): 765–807.
71.
PollanenRLoiselle-LapointeK (2012) Accounting reform in the government of Canada: Exploratory evidence on accrual accounting adoption and impact. Financial Accountability & Management28(4): 359–377.
72.
PollittC (2002) Clarifying convergence: Striking similarities and durable differences in public management reform. Public Management Review4(1): 471–492.
73.
PollittCBouckaertG (2011) Public Management Reform: A Comparative Analysis. New York: Oxford University Press.
74.
Promotion Society for Municipalities in Osaka Prefecture (2009). Report on “Research on Public Sector Accounting Reform”, Osaka.
75.
PuxtyAGCooperDJLoweT (1987) Modes of regulation in advanced capitalism: Locating accountancy in four countries. Accounting, Organizations and Society12(3): 273–291.
76.
RyanC (1998) The introduction of accrual reporting policy in the Australian public sector: An agenda setting explanation. Accounting, Auditing & Accountability Journal11(5): 518–539.
77.
RyanCGuthrieJDayR (2007) Politics of financial reporting and the consequences for the public sector. Abacus43(4): 474–487.
78.
Saitama Prefecture Assembly Secretariat (2012) The Minutes of Saitama Prefecture Assembly, 27June2012, Saitama Prefecture.
79.
SargiacomoMGomesD (2011) Accounting and accountability in local government: Contributions from accounting history research. Accounting History16(3): 253–290.
80.
SatoT (1987) Financial management by using a balance sheet. Nihon Keizai Shimbun, 4December.
SinghJVTuckerDJMeinhardAG (1991) Institutional change and ecological dynamics. In: PowellWWDiMaggioPJ (eds) The New Institutionalism in Organizational Analysis. Chicago: University of Chicago Press, pp. 390–422.
83.
StewartRStewartJ (1994) Management for the Public Domain: Enabling the Learning Society. London: St Martin’s Press.
SuchmanMC (1995) Managing legitimacy: Strategic and institutional approaches. The Academy of Management Review20(3): 571–610.
86.
SuddabyRGreenwoodR (2005) Rhetorical strategies of legitimacy. Administrative Science Quarterly50(1): 35–67.
87.
StreeckWSchmitterPC (1985) Community, market, state – and associations? In: StreeckWSchmitterPC (eds) Private Interest Government and Public Policy. London: Sage.
88.
Ter BogtHJ (2008) Management accounting change and new public management in local government: A reassessment of ambitions and results – an institutionalist approach to accounting change in the Dutch public sector. Financial Accountability and Management24(3): 209–241.
89.
ThelenK (1999) Historical institutionalism in comparative politics. Annual Review of Political Science2(1): 369–404.
90.
Tokyo Metropolitan Government (2010) Report of Symposium on Public Sector Accounting System Reform. Tokyo (in Japanese).
91.
Van HeldenGJAardemaHter BogtHJGrootTLCM (2010) Knowledge creation for practice in public sector management accounting by consultants and academics: Preliminary findings and directions for future research. Management Accounting Research21(2): 83–94.
92.
WattsRLZimmermanJL (1979) The demand for and supply of accounting theories: The market for excuses. The Accounting Review54(2): 273–305.
93.
WijenFAnsariS (2007) Overcoming inaction through collective institutional entrepreneurship: Insights from regime theory. Organization Studies28(7): 1079–1100.
94.
YamamotoK (1989) History of public sector accounting in Japan. Journal of Urban Management Review5(1): 1–13 (in Japanese).
95.
YamamotoK (2000) Accounting system reform and management in the Japanese local government. In: CaperchioneEMussariR (eds) Comparative Local Government Accounting. Boston: Kluwer.
96.
YamamotoK (2011) What are the prerequisites necessary to realizing public sector reform?Accounting and Auditing62(7): 13–19 (in Japanese).
97.
ZimmermanJL (1977) The municipal accounting maze: An analysis of political incentives. Journal of Accounting Research15: 107–144.
98.
ZysmanJ (1994) How institutions create historically rooted trajectories of growth. Industrial and Corporate Change3(2): 243–283.
