This study examines the relationship between internal governance and earnings management in Japanese listed firms. Following recent accounting fraud in large companies, Japanese internal governance systems have been widely criticized. Japan has a bank-dominated corporate governance system. This study predicts that the bank–client relationship mitigates opportunistic earnings management by reducing the degree of information asymmetry. The results show that bank-appointed audit board members mitigate managerial earnings management. Neither outside directors nor audit committees help reduce opportunistic managerial earnings management. The findings imply that a lender monitoring system can substitute the monitoring role of outside directors and audit committees.

中文翻译：

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银行主导公司治理中的盈利质量和内部控制

本研究考察了日本上市公司内部治理与盈余管理之间的关系。继最近大公司的会计舞弊之后，日本的内部治理系统受到了广泛的批评。日本实行银行主导的公司治理体系。本研究预测，银行-客户关系通过降低信息不对称程度来减轻机会主义盈余管理。结果表明，银行任命的审计委员会成员减轻了管理层盈余管理。外部董事和审计委员会都无助于减少机会主义的管理盈余管理。调查结果表明，贷方监控系统可以替代外部董事和审计委员会的监控角色。