An influential accounting study group formally expressed its opposition Friday to a proposal by ruling coalition lawmakers to change accounting rules on corporate shareholdings to limit damage from stock market declines.

The Accounting Standards Board of Japan said in its report it is "difficult to find sufficient significance" to justify the proposed freezing of the mark-to-market method of accounting for stocks long held by corporations.

The Commercial Code requires companies to record valuation losses if the market prices of shares held by the firms fall by more than 50 percent from their book values and are deemed unlikely to turn around.

A group of lawmakers in the ruling Liberal Democratic Party, New Komeito and the New Conservative Party have drafted a bill to freeze the mark-to-market rule and hope to present it to the Diet during the current session.

The accounting study group, a key committee of Financial Accounting Standards Foundation, also opposes another proposal by the coalition to postpone the planned introduction in fiscal 2005 of an accounting rule under which companies must book valuation losses on their fixed assets.

The group concluded that such a rule could fuel distrust among market players.