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The Impact of Ownership Structure on Earnings Usefulness: Japanese Evidence

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  • Chung-Ki Min
  • Sun Young Whang

Abstract

Using a large sample of Japanese firms, this paper examines the impact of the ownership structure on managerial incentives for income smoothing through discretionary accrual choices. Our results show that like US managers, Japanese managers engage in income smoothing in consideration of both current earnings and expected future earnings. More importantly, we find that managers' ability to smooth income through discretionary accrual choices is constrained by external monitoring by financial institutions, while it is enhanced by managerial entrenchment arising from cross-corporate shareholdings.

Suggested Citation

  • Chung-Ki Min & Sun Young Whang, 2001. "The Impact of Ownership Structure on Earnings Usefulness: Japanese Evidence," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 4(1), pages 109-124, March.
    • Handle: RePEc:sae:intare:v:4:y:2001:i:1:p:109-124
    DOI: 10.1177/223386590100400108
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