Shareholdings by financial institutions, information asymmetry and the intertemporal return-earnings relation in Japan

Sandra W.M. Ho, Li Jiang, Jeong Bon Kim

Research output: Journal article publicationJournal articleAcademic researchpeer-review

1 Citation (Scopus)

Abstract

Using a large sample of Japanese firms, we examine informational effects of the joint ownership of debt and equity by financial institutions. In particular, we argue that shareholdings by financial institutions are associated with increased monitoring and reduced information asymmetry. Our results support the hypothesis that stock prices incorporate information about future earnings earlier for firms with higher equity ownership by financial institutions. In a nutshell, shareholdings by financial institutions appear to be an important institutional factor in Japan to alleviate information asymmetry, thereby serving as a substitute for the market-based monitoring.
Original languageEnglish
Pages (from-to)119-135
Number of pages17
JournalAsia-Pacific Financial Markets
Volume8
Issue number2
DOIs
Publication statusPublished - 1 Jan 2001

Keywords

  • Financial institutions
  • Information asymmetry
  • Joint ownership of debt and equity
  • Return-earnings relation

ASJC Scopus subject areas

  • Finance

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