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Effects of Corporate Governance on the Relationship between Accounting Quality and Trade Credit: Evidence from Japan

Author

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  • Masahiro Enomoto

    (Research Institute for Economics & Business Administration (RIEB), Kobe University, Japan)

Abstract

This study investigates the effects of shareholdings on the relationship between accounting quality and trade credit in Japan. It focuses on cross-sectional and stable shareholdings, which are well-known features of Japanese corporate governance, as a private information-sharing system. The relationships among cross- and stable shareholdings, accounting quality, and trade credit are tested. The results indicate that the trade credit of customers without either cross- or stable shareholdings increases with accounting quality, and in most cases, such shareholdings weaken the relationship between accounting quality and trade credit. These findings suggest that close ties to cross- and stable shareholders reduce the importance of accounting information through sharing private information.

Suggested Citation

  • Masahiro Enomoto, 2018. "Effects of Corporate Governance on the Relationship between Accounting Quality and Trade Credit: Evidence from Japan," Discussion Paper Series DP2018-12, Research Institute for Economics & Business Administration, Kobe University, revised Dec 2023.
    • Handle: RePEc:kob:dpaper:dp2018-12
    as

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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2018-12.pdf
    File Function: Revised version, 2023
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    More about this item

    Keywords

    Accounting quality; Cross-shareholdings; Stable shareholdings; Trade credit;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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