Japanese companies should be barred from recording income from the sale of cross-shareholdings, said Tatsumi Yamada, a member of the International Accounting Standards Board.
The IASB proposed accounting changes last month that may reduce Japanese companies incentives to hold each other's shares. Meant to bolster ties, cross-shareholding often leads to the sale of those shares to bolster income statements before the financial year ends, only to be bought back at a later date.
"Companies shouldn't be able to reflect profits and losses on the sale of cross-shareholdings if the purpose of the holdings is to cement a strategic relationship," Yamada said in Tokyo on Aug. 25.