We empirically examine the effects of economic policy uncertainty (EPU) on earnings management in Japan. We find that EPU is negatively associated with earnings management, indicating that managers have incentive to reduce earnings management when EPU increases. We then examine the monitoring roles of various entities, focusing on the main bank that holds equity in their client firm. We find that the relationship between EPU and earnings management is less pronounced for firms with a main bank. The result is consistent with the view that the main bank’s monitoring role works well in normal times, resulting in less room for management to improve earnings quality when EPU is high. We find a similar result when considering firms with and without analyst coverage. These results suggest a moderating role of main banks and analysts in the relationship between EPU and earnings management. Finally, we find that the effect of EPU differs depending on subcategories on policy uncertainty and the extent of each firm’s exposure to that type of uncertainty.

我们实证检验了经济政策不确定性 (EPU) 对日本盈余管理的影响。我们发现 EPU 与盈余管理负相关，表明当 EPU 增加时，管理者有减少盈余管理的动机。然后，我们检查各个实体的监控角色，重点是持有客户公司股权的主要银行。我们发现 EPU 和盈余管理之间的关系对于拥有主要银行的公司来说不那么明显。其结果与正常时期主行监控作用良好的观点一致，导致在 EPU 较高的情况下，管理层提升盈余质量的空间较小。在考虑有和没有分析师覆盖的公司时，我们发现了类似的结果。这些结果表明主要银行和分析师在 EPU 与盈余管理之间的关系中具有调节作用。最后，我们发现 EPU 的影响因政策不确定性的子类别和每家公司对此类不确定性的暴露程度而异。