دانلود رایگان مقاله انگلیسی تاثیر برگزاری سهام توسط بانک های اصلی بر کیفیت درآمد شرکت های مشتری - الزویر 2017

Abstract

This paper empirically investigates the role of the main banks in enhancing earnings quality of their client firms in Japan and unveils some intriguing results. First, equity holdings of the main banks improve earnings quality of their client firms. Second, such shareholdings help attenuate the adverse effect of foreign shareholdings on earnings quality, indicating that the main banks can substitute the monitoring role of foreign shareholders. Third, the effect of institutional, executive and dominant shareholdings on earnings quality disappears when the main banks inject equity, implying that the main banks can significantly reduce agency problem in financial intermediation even in Japan’s contemporary financial setup where the market-based monitoring system for firms has been encouraged. Furthermore, the role of the main banks remains significant when the cross-shareholding and stable shareholding are taken into account, suggesting that the equity ownership of the main banks help improve earnings quality through effective monitoring.

5. Conclusion and Policy Remarks

This study empirically examined the influence of the main banks’ shareholdings on the earnings quality of their borrowing firms in the contemporary institutional and financial set up in Japan that seemingly encouraged Western-style governance system to replace the traditional bank–centered monitoring system for corporations. We find that equity holdings of the main bank significantly enhance earnings quality of its client firms through efficient monitoring of managerial discretionary behavior, suggesting that the effectiveness of the main bank monitoring not wither away in Japan. Moreover, the influence of the main bank continues to prevail even when different classes of shareholders such as domestic institutional, foreign, executives, small, dominant, cross and stable shareholders are included separately in the regression model with the main bank's shareholdings. We also find that the role of foreign investors in undertaking monitoring activities of firms, which was encouraged in the big bang reform, tend to work in the opposite direction, implying that they erode the earnings quality of firms instead of improving it. Besides, the adverse impact of foreign shareholding on earnings quality diminishes when the equity holdings of the main bank are considered. This implies that the main bank can counteract the undesirable effect of foreign shareholding by increasing equity holdings in firms. Most importantly, the influence of institutional and executive shareholders on earnings quality disappears when the main bank extends equity. However, cross-shareholding and stable shareholding are found to be associated with higher earnings quality in the presence of the main bank shareholding. These findings are consistent with monitoring rationale that postulates that the stringent monitoring of the main bank is effective in mitigating agency conflicts and information asymmetry, the existence of which provides the managers good opportunity to use their discretion over accounting choices opportunistically. Additionally, we found that shareholding by the main bank tends to reduce idiosyncratic return volatility meaning that it leads to a reduction in mispricing in securities or noise trading by irrational investors.