2009 Fiscal Year Final Research Report

The effect of new consolidated reporting system on managerial Behaviors

Research Project

Project/Area Number	20730310
Research Category	Grant-in-Aid for Young Scientists (B)
Allocation Type	Single-year Grants
Research Field	Accounting
Research Institution	Kobe University
Principal Investigator	SHUTO Akinobu Kobe University, 経済経営研究所, 准教授 (60349181)
Project Period (FY)	2008 – 2009
Keywords	利益調整 / 連結財務諸表 / 会計制度 / 経済的影響
Research Abstract	This research examines the effect of new consolidated reporting system on managerial behaviors. In particular, it examines whether consolidated earnings are managed to a greater extent than parent-only earnings or vice versa in an attempt to exceed the threshold in Japanese firms. The analysis reveals that earnings management to avoid earnings decreases is more pronounced in parent-only earnings for the period 1980-1999. Further, it reveals that the management of parent-only earnings has been less pervasive following the introduction of the new consolidated reporting system in March 2000. In addition, this paper provides evidence suggesting that earnings management in consolidated earnings increased after March 2000. These results indicate the possibility that the new consolidated reporting system and principles reduce the incentive to manage parent-only earnings and increase that to manage consolidated earnings.