IDEAS home Printed from https://ideas.repec.org/a/eee/pacfin/v60y2020ics0927538x19305591.html
   My bibliography  Save this article

The real effect of mandatory disclosure in Japanese firms

Author

Listed:
  • Sakawa, Hideaki
  • Watanabel, Naoki
  • Yamada, Akihiro
  • Duppati, Geeta

Abstract

This study replicates the effects of mandatory segment disclosures on corporate real investment decisions in a Japanese setting. We focus on the mandatory segment disclosure changes implemented in Japan since 2011 and find that unlike the case with US firms, these disclosures have not affected the corporate investment decisions of large Japanese firms. Mandatory segment disclosures were introduced in Japan in 2011, coinciding with Great East Japan Earthquake, explaining the subsequent increase in investments. Therefore, we estimate that, based on the learning model, Japanese mandatory disclosures might be confounded by the revelatory price efficiency crowding-out effects that led to a decrease in the corporate investment of US firms.

Suggested Citation

  • Sakawa, Hideaki & Watanabel, Naoki & Yamada, Akihiro & Duppati, Geeta, 2020. "The real effect of mandatory disclosure in Japanese firms," Pacific-Basin Finance Journal, Elsevier, vol. 60(C).
  • Handle: RePEc:eee:pacfin:v:60:y:2020:i:c:s0927538x19305591
    DOI: 10.1016/j.pacfin.2020.101298
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0927538X19305591
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.pacfin.2020.101298?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Thierry Foucault & Laurent Frésard, 2012. "Cross-Listing, Investment Sensitivity to Stock Price, and the Learning Hypothesis," The Review of Financial Studies, Society for Financial Studies, vol. 25(11), pages 3305-3350.
    2. Edmans, Alex & Jayaraman, Sudarshan & Schneemeier, Jan, 2017. "The source of information in prices and investment-price sensitivity," Journal of Financial Economics, Elsevier, vol. 126(1), pages 74-96.
    3. Bai, Jennie & Philippon, Thomas & Savov, Alexi, 2016. "Have financial markets become more informative?," Journal of Financial Economics, Elsevier, vol. 122(3), pages 625-654.
    4. Young Jun Cho, 2015. "Segment Disclosure Transparency and Internal Capital Market Efficiency: Evidence from SFAS No. 131," Journal of Accounting Research, Wiley Blackwell, vol. 53(4), pages 669-723, September.
    5. Philip G. Berger & Rebecca Hann, 2003. "The Impact of SFAS No. 131 on Information and Monitoring," Journal of Accounting Research, Wiley Blackwell, vol. 41(2), pages 163-223, May.
    6. Sakawa, Hideaki & Ubukata, Masato & Watanabel, Naoki, 2014. "Market liquidity and bank-dominated corporate governance: Evidence from Japan," International Review of Economics & Finance, Elsevier, vol. 31(C), pages 1-11.
    7. repec:oup:rfinst:v:25:y::i:11:p:3305-3350 is not listed on IDEAS
    8. Sudarshan Jayaraman & Joanna Shuang Wu, 2019. "Is Silence Golden? Real Effects of Mandatory Disclosure," The Review of Financial Studies, Society for Financial Studies, vol. 32(6), pages 2225-2259.
    9. Philip Bond & Alex Edmans & Itay Goldstein, 2012. "The Real Effects of Financial Markets," Annual Review of Financial Economics, Annual Reviews, vol. 4(1), pages 339-360, October.
    10. Christian Leuz & Peter D. Wysocki, 2016. "The Economics of Disclosure and Financial Reporting Regulation: Evidence and Suggestions for Future Research," Journal of Accounting Research, Wiley Blackwell, vol. 54(2), pages 525-622, May.
    11. Pingyang Gao & Pierre Jinghong Liang, 2013. "Informational Feedback, Adverse Selection, and Optimal Disclosure Policy," Journal of Accounting Research, Wiley Blackwell, vol. 51(5), pages 1133-1158, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sakawa, Hideaki & Watanabel, Naoki & Yamauchi, Shohei & Liu, Runxi, 2023. "The effect of Tobin's q on investment in a bank-based financial system: Evidence from Japan," Pacific-Basin Finance Journal, Elsevier, vol. 77(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Itay Goldstein & Shijie Yang & Luo Zuo, 2020. "The Real Effects of Modern Information Technologies: Evidence from the EDGAR Implementation," NBER Working Papers 27529, National Bureau of Economic Research, Inc.
    2. Sani, Jalal & Shroff, Nemit & White, Hal, 2023. "Spillover effects of mandatory portfolio disclosures on corporate investment," Journal of Accounting and Economics, Elsevier, vol. 76(2).
    3. Itay Goldstein, 2023. "Information in Financial Markets and Its Real Effects," Review of Finance, European Finance Association, vol. 27(1), pages 1-32.
    4. Jianghua Shen & Lingmin Xie & Zhimin Xie, 2022. "The unintended consequence of financial statement comparability: evidence from managerial learning practices," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(3), pages 3073-3106, September.
    5. Ye, Mao & Zheng, Miles Y. & Zhu, Wei, 2023. "The effect of tick size on managerial learning from stock prices," Journal of Accounting and Economics, Elsevier, vol. 75(1).
    6. Zhao, Jing & Huang, Jingchang & Dou, Huan, 2023. "Internet searching and investment sensitivity to stock price: Evidence from a quasi-natural experiment," Finance Research Letters, Elsevier, vol. 51(C).
    7. Jin, Ling & Li, Zhisheng & Lu, Lei & Ni, Xiaoran, 2023. "Does stock market rescue affect investment efficiency in the real sector?," Journal of Financial Markets, Elsevier, vol. 65(C).
    8. Pinto, Jedson, 2023. "Mandatory disclosure and learning from external market participants: Evidence from the JOBS act," Journal of Accounting and Economics, Elsevier, vol. 75(1).
    9. Zhu, Qi & Jin, Sisi & Huang, Yuxuan & Yan, Cheng & Chen, Chuanglian, 2022. "Oil price uncertainty and stock price informativeness: Evidence from investment-price sensitivity in China," International Review of Financial Analysis, Elsevier, vol. 84(C).
    10. Zhang, Teng & Xu, Zhiwei, 2023. "The informational feedback effect of stock prices on corporate investments: A comparison of new energy firms and traditional energy firms in China," Energy Economics, Elsevier, vol. 127(PA).
    11. Yangyang Chen & Jeffrey Ng & Xin Yang, 2021. "Talk Less, Learn More: Strategic Disclosure in Response to Managerial Learning from the Options Market," Journal of Accounting Research, Wiley Blackwell, vol. 59(5), pages 1609-1649, December.
    12. Bennett, Benjamin & Stulz, René & Wang, Zexi, 2020. "Does the stock market make firms more productive?," Journal of Financial Economics, Elsevier, vol. 136(2), pages 281-306.
    13. Chen, Zhihong & Huang, Yuan & Kusnadi, Yuanto & John Wei, K.C., 2017. "The real effect of the initial enforcement of insider trading laws," Journal of Corporate Finance, Elsevier, vol. 45(C), pages 687-709.
    14. Jeon, Heung-Jae, 2023. "CEO overconfidence: A dual-detriment to investment-price sensitivity via market negligence and reduced informed trading," Journal of Contemporary Accounting and Economics, Elsevier, vol. 19(3).
    15. Thanh Huong Nguyen, 2019. "Information and Noise in Stock Markets: Evidence on the Determinants and Effects Using New Empirical Measures," PhD Thesis, Finance Discipline Group, UTS Business School, University of Technology, Sydney, number 7-2019, January-A.
    16. Steven Chong Xiao, 2020. "Do Noisy Stock Prices Impede Real Efficiency?," Management Science, INFORMS, vol. 66(12), pages 5990-6014, December.
    17. Roychowdhury, Sugata & Shroff, Nemit & Verdi, Rodrigo S., 2019. "The effects of financial reporting and disclosure on corporate investment: A review," Journal of Accounting and Economics, Elsevier, vol. 68(2).
    18. Tse-Chun Lin & Qi Liu & Bo Sun, 2015. "Contracting with Feedback," International Finance Discussion Papers 1143, Board of Governors of the Federal Reserve System (U.S.).
    19. Lee, Eugenia Y. & Ha, Wonsuk & Park, Sunyoung, 2023. "Auditor specialization in R&D and clients’ R&D investment-q sensitivity," Journal of Contemporary Accounting and Economics, Elsevier, vol. 19(2).
    20. Zhu, Qi & Jin, Sisi & Huang, Yuxuan & Yan, Cheng, 2022. "Oil price uncertainty and stock price informativeness: Evidence from listed U.S. companies," Energy Economics, Elsevier, vol. 113(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pacfin:v:60:y:2020:i:c:s0927538x19305591. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/pacfin .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.