Previous studies suggest that Japanese suppliers of capital, such as main banks, have private sources of information, and thus, the quality of public accounting information may be less relevant to their decisions. Studies also indicate that the firm–bank relationship in Japan has weakened with...

This study investigates the effect of the balance sheet approach, where financial reporting focuses on asset and liability valuation, on the usefulness of the capital adequacy ratio in the evaluation of bank default risk by credit rating agencies. We examine Japanese banks, which play the...

Biddle and Hilary (2006) demonstrate that accounting quality improves investment efficiency in the U.S. but not in Japan. We examine whether no relation between accounting quality and investment efficiency remains valid in Japan beyond their study period, which ends in 2001. We hypothesize that...