Effects of Corporate Governance on the Relationship between Accounting Quality and Trade Credit: Evidence from Japan


This study investigates the effects of shareholdings on the relationship between accounting quality and trade credit in Japan. It focuses on cross-sectional and stable shareholdings, which are well-known features of Japanese corporate governance, as a private information-sharing system. The relationships between cross- and stable shareholdings, accounting quality, and trade credit are tested. The results show that the trade credit of customers without either cross- or stable shareholdings increases with accounting quality, and in most cases, such shareholdings weaken the relationship between accounting quality and trade credit. These findings suggest that close ties to cross- and stable shareholders reduce the importance of accounting information through sharing private information.


Trade credit; Accounting quality; Cross-shareholdings; Stable shareholdings

JEL Classification

G34, M41


Masahiro ENOMOTO
Research Institute for Economics and Business Administration,
Kobe University
Rokkodai-cho, Nada-ku, Kobe
657-8501 Japan
Phone: +81-78-803-7036
FAX: +81-78-803-7059