The changing nature of financial disclosure in Japan

Abstract

This paper investigates whether Japanese companies listed on the Tokyo Stock Exchange (TSE) altered their voluntary accounting disclosure behavior over the period of the 1990s. It implicitly tests for whether the collapse of Japan's “Financial Bubble” in the late 1980s altered the incentives of Japanese managers to be more forthcoming about corporate information. Previous research on Japanese disclosure practices highlights the “secretive” nature of Japanese managers and suggests that cultural preferences strongly discourage disclosure. Our findings suggest that Japanese disclosure practices are sensitive to economic conditions.