Cross-corporate ownership, information asymmetry and the usefulness of accounting performance measures in Japan

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Original languageEnglish
Pages (from-to)85-98
Journal / PublicationInternational Journal of Accounting
Issue number1
Online published27 Mar 2000
Publication statusPublished - Mar 2000
Externally publishedYes


Using a large sample of Japanese firms, this paper examines the informational role of cross-corporate, interlocking ownership in Japan. We hypothesize that as the level of cross-corporate ownership increases, there will be less information asymmetry between the firm and market participants, and thus, stock prices of firms with high cross-corporate shareholdings incorporate information about future profitability earlier than do stock prices of firms with low cross-corporate shareholdings. Results of various tests strongly support the hypothesis, suggesting that cross-corporate shareholdings are an important institutional factor that alleviates the information asymmetry in the Japanese equity market. Copyright © 2000 University of Illinois.

Research Area(s)

  • Cross-corporate ownership, Information asymmetry, Information sharing, Informational efficiency, Intertemporal return-earnings associations, Japan