Managerial Ownership and Accounting Conservatism in Japan: A Test of Management Entrenchment Effect
Akinobu Shuto and
Journal of Business Finance & Accounting, 2010, vol. 37, issue 7‐8, 815-840
Abstract: We examine the effect of managerial ownership on the demand for accounting conservatism in Japan. We find that within the low and high levels of managerial ownership, managerial ownership is significantly negatively related to the asymmetric timeliness of earnings, which is consistent with the implication of the incentive alignment effect. We also find a significant positive relationship between managerial ownership and the asymmetric timeliness of earnings for the intermediate levels of managerial ownership, as suggested by the management entrenchment effect. These evidences suggest the possibility that accounting conservatism contributes to addressing the agency problem between managers and shareholders.
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jbfnac:v:37:y:2010:i:7-8:p:815-840
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