A firm's ownership structure influences both its liquidity and value. This paper introduces a new measure of latent investment horizon, a weighted average investment horizon computed from the firm's ownership structure and the average investment horizon of various investor categories. We find...

Combining (i) a consumption-based asset pricing model without market return derived by Restoy and Weil (2004) and (ii) a log-linearized clean-surplus relation by Vuolteenaho (2000), I have developed a consumption and accounting-based asset pricing model. Accounting numbers are crucial...

The dividend discount model is a special case of the residual income model and the fundamental value of the firm is a scalar invariant under any accounting system with the clean-surplus. Under double-entry bookkeeping, any accounting system is relative concerning valuation in the sense that the...

To make accounting information useful for investment decision, the FASB/IASB Conceptual Framework Project must carefully study such economic concepts as income, and take an established piece of empirical evidence seriously: cost of capital is not stable, let alone constant

Since the 1970s, the decision-usefulness has taken center stage and our attention has been concentrated on valuation of assets and liabilities instead of income measurement. The concept of income, once considered the gravitational center of accounting has lost its primacy and become a byproduct...

Criticizing the IASB's Conceptual Framework project based on the balance sheet approach, Barker and Penman (2016) have been advocating a mixed balance sheet and income statement approach. Although they do not seem to have noticed, their approach is quite similar to that of the Japanese...

This article decomposes the business-level profit rate of Japanese multi-business corporations by performing a variance components analysis on a large sample of publicly traded non-financial firms in 1998–2003. Consistent with US evidence, estimation results demonstrate that profitability is...

This article examines the industry diversification of the 142 largest Japanese manufacturers in 1973-1998. We find that sample firms steadily increased diversification. Despite the increase, the relatedness of their business measured in three ways based on the Japanese IO table stayed...