Long-term comparability of accounting information in Japan

Yo Isokawa

International Journal of Economics and Accounting, 2021, vol. 10, issue 2, 231-247

Abstract: This study examines the tendency of accounting information comparability in Japan over the 30-year period from 1988 to 2017. Several prior studies testing accounting information's usefulness indicate that value relevance tends to decline over the long term. Accounting information's comparability is another aspect of its usefulness. Even if value relevance declines over time, improved comparability can enhance the usefulness of accounting information. This study provides a long-term analysis from the perspective of De Franco et al. (2011) idea of comparability. The results show that comparability in Japan also tends to decline over the long term and did not improve with convergence with the International Financial Reporting Standards. However, comparability tended to improve after 2012. The additional analysis shows that the bid-ask spread rate decreases as comparability improves. Thus, comparability declined in Japan, and asymmetric information is expanding.

Keywords: comparability; convergence with IFRS; value relevance; asymmetric information; bid-ask spread; long-term analysis; usefulness of accounting information; changes in business activities; Japan. (search for similar items in EconPapers)
Date: 2021
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