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

47 Pages Posted: 17 May 2018 Last revised: 14 Sep 2022

See all articles by Masahiro Enomoto

Masahiro Enomoto

Kobe University - Research Institute for Economics & Business Administration

Date Written: September 9, 2022

Abstract

This study investigates the effects of shareholdings on the relationship between accounting quality and trade credit in Japan. It focuses on cross- and stable shareholdings, which are well-known features of Japanese corporate governance, as a private information-sharing system. The relationships between cross- and stable shareholdings, accounting quality, and trade credit are tested. The results show 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.

Keywords: accounting quality, cross-shareholdings, main bank, stable shareholdings, trade credit

JEL Classification: G32, M41

Suggested Citation

Enomoto, Masahiro, Effects of Corporate Governance on the Relationship between Accounting Quality and Trade Credit: Evidence from Japan (September 9, 2022). Available at SSRN: https://ssrn.com/abstract=3171338 or http://dx.doi.org/10.2139/ssrn.3171338

Masahiro Enomoto (Contact Author)

Kobe University - Research Institute for Economics & Business Administration ( email )

2-1, Rokkodai cho
Nada-ku
Kobe, 657-8501
Japan

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