MYOPIC MANAGEMENT BEHAVIOR WITH EFFICIENT, BUT IMPERFECT, FINANCIAL-MARKETS - A COMPARISON OF INFORMATION ASYMMETRIES IN THE UNITED-STATES AND JAPAN

In order to gain insights into possible cross-national differences in asymmetric information between managers and investors, we empirically assess differences in timing between the U.S. and the Japanese stock markets in impounding accounting information. Our findings indicating that the Japanese stock market incorporates information earlier than does the U.S. stock market are consistent with the hypothesis that Japanese investors, who tend to have close ties to the businesses they invest in, are better informed than their U.S. counterparts. We suggest, building on Stein's (1989) work on market signaling/jamming, that larger information asymmetries in the U.S. may be creating incentives for a short-run management style detrimental to long-term competitiveness.