Assessing the condition of Japanese banks: How informative are accounting earnings?
This article examines the accounting and stock market performance of Japanese banks
from 1991 to 1997. Overall, the results indicate that the accounting, disclosure, and
regulatory practices of Japanese banks have driven a wedge between their accounting
and stock market returns in recent years and, furthermore, that regulatory forbearance
might have become a more important source of value to shareholders than the value
of assets in place.