We examine time-series variations in accounting conservatism in the Japanese market. Previous studies have found that the Japanese market has low accounting conservatism. Over the last 30 years, however, the Japanese market has experienced significant institutional changes. Thus, we examine...

This paper examines the relation between investor protection and real earnings management. We build on the work of La Porta et al. (2000), who found that countries with different legal systems protect investors differently. Using a sample of more than 13,000 unique firms in over 54 countries,...

Prior studies argue that stable shareholders do not encourage firm managers to manage their earnings to achieve short-term earnings goals. They also state that firm managers with stable shareholders have an incentive to report smooth earnings to maintain long-term relationships with such...

Prior research finds that the Sarbanes-Oxley Act (US-SOX) of 2002 has affected earnings management in the United States. Cohen et al. (2008) indicate that accrual-based earnings management has declined since the passage of US-SOX, while real earnings management has increased. Further, Gilliam et...

This paper analyzes the effects of the book-tax difference (BTD) on accounting accruals and value relevance. Recent studies argued that book-tax conformity increases earnings quality. However, other studies argued that book-tax conformity decreases earnings quality. The previous studies failed...

This paper examines the differences in accrual-based and real earnings management across countries from the perspective of investor protection. Following prior research (Leuz et al., 2003), we hypothesize that accrual-based earnings management is more constrained by strict discipline in...

This paper develops a simple model to examine the dynamic relationship between earnings management and accounting regulations. In this model, current accrual-based earnings management affects the tightness of future regulations and managers rationally choose the levels of both accrual-based and...

Lobo and Zhou (2006) find an increase in accounting conservatism following the Sarbanes–Oxley Act of 2002. In Japan, the Financial Instruments and Exchange Act of 2006, the so-called Japanese Sarbanes–Oxley Act (J-SOX), was implemented for fiscal years ending on or after March 31, 2009....

Studying a sample of Japanese firms, we examine whether foreign investors exert a significant influence on earnings management through manipulation of real activities. We find that foreign investors play an independent role in restraining real earnings management, as captured by abnormal cash...

This study investigates the relation between discretionary accounting choices and executive compensation in Japanese firms. The results show that the use of discretionary accruals increases executive compensation. The analyses also show that firm managers receiving no bonus adopt...