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| Author: | Douthett, E. B. Jr. Jung, K. |
| Title: | Japanese Corporate Groupings (Keiretsu) and the Informativeness of Earnings |
| Journal: | Journal of international financial management & accounting
2001 : SUMMER, VOL. 12:2, p. 133-159 |
| Index terms: | FINANCIAL MANAGEMENT JAPAN GROUPS ANALYTICAL REVIEW |
| Language: | eng |
| Abstract: | This paper examines the effect of Japanese corporate groupings, keiretsu, on the informativeness of earnings. Keiretsu firms maintain close financial and personal ties through cross-shareholding, credit holding, interlocking corporate directorates, and various business transactions. The authors propose that the strong interrelations of the keiretsu ownership structure enhance the informativeness of earnings through efficient monitoring of managerial performance. The authors' empirical results show that keiretsu firms have higher earnings response coefficients than those of aon-keiretsu firms, the earnings response coefficient increases as the strength of the keiretsu relationship increases, and discretionary accruals by keiretsu firms are smaller than discretionary accruals of non-keiretsu firms. |
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