Research Question/Issue. This study investigates the effect of cross‐shareholding on financial reporting and the information environment in the Japanese market and hypothesizes that higher cross‐shareholding is related to lower contract‐efficient earnings recognition and higher information asymmetry because cross‐shareholding entrenches managers. Furthermore, we investigate whether managers try to maximize their self‐interest or to enjoy a quiet life when they are isolated from market pressure and entrenched owing to cross‐shareholding. Research Findings/Insights. Using a unique dataset on cross‐shareholding among Japanese listed firms, we find that higher cross‐shareholding is associated with (1) less timely loss recognition and (2) higher probability of information‐based trading. Further investigation clarifies that higher cross‐shareholdings are related to (3) lower absolute forecast error and (4) lower R&D expenditures. The first two findings indicate that cross‐shareholding entrenches managers, and the last two findings show that entrenched managers enjoy a quiet life. Theoretical/Academic Implications. This study contributes to the corporate governance literature by providing new evidence that cross‐shareholding influences financial reporting and the information environment in the market by inducing managers to become entrenched and to enjoy a quiet life. Practitioner/Policy Implications. This study provides implications for policymakers in markets in which cross‐shareholding is a common ownership format. To enhance contract‐efficient financial reporting and/or reduce information asymmetry in the market, it may be necessary to reduce cross‐shareholding.

中文翻译：

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交叉持股如何影响财务报告：来自日本的证据

研究问题/问题。本研究调查了交叉持股对财务报告和日本市场信息环境的影响，并假设交叉持股与较低的合同效率收益确认和更高的信息不对称有关，因为交叉持股使管理者更加稳固。此外，我们调查了当他们与市场压力隔绝并因交叉持股而根深蒂固时，管理者是否试图最大化自身利益或享受平静的生活。研究结果/见解。使用日本上市公司之间交叉持股的独特数据集，我们发现较高的交叉持股与 (1) 较不及时的损失确认和 (2) 较高的信息化交易概率相关。进一步调查表明，较高的交叉持股与（3）较低的绝对预测误差和（4）较低的研发支出有关。前两个调查结果表明交叉持股使经理人更加稳固，后两个调查结果表明根深蒂固的经理人享受平静的生活。理论/学术影响。本研究提供了新的证据，证明交叉持股通过诱导管理者变得根深蒂固并享受平静的生活，从而影响财务报告和市场信息环境，从而为公司治理文献做出了贡献。从业者/政策影响。本研究为交叉持股是一种常见所有权形式的市场中的决策者提供了启示。为了提高合同效率的财务报告和/或减少市场中的信息不对称，