RIEB, Kobe University

Accounting for Dissolution: The Case of Japanese Mining Corporations 1946-1950

The study, which makes extensive use of official Holding Company Liquidation Commission (HCLC) documents possessed by the National Archives of Japan, examines accounting practices adopted by three Japanese mining corporations in their dissolution in the immediate postwar period from 1946 to 1950. The study finds that (1) the conventional accounting practices adopted by the zaibatsu companies were adequate to enable them to implement their own dissolution and that (2) forecast balance sheets prepared by the companies, produced after the HCLC decided to split them up, provided an important basis for the development of the postwar corporate accounting system. This was because they supplied a practical precedent, in which features of the new system materialized before it was formally instituted, as the forecast balance sheets make use of provisions in the 'Instruction for the Preparation of Financial Statements of Manufacturing and Trading Companies', issued by the General Headquarters (GHQ) in July 1947. The study's results contribute to the literature on the quality of accounting information provided by the Japanese zaibatsu organizations. Early research generally assessed the financial statements submitted to the HCLC as having many defects, while more recent research indicates that the accounting practices adopted by these companies were not deficient in their own domestic environment. Since neither assertion is founded on empirical data, the examination conducted in this study provides important evidence to support the latter view.