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What Explains Widening Profitability Dispersion Around The World?

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  • NAKANO, MAKOTO
  • 中野, 誠
  • AOKI, YASUHARU

Abstract

This study explores the fundamentals of profitability dispersion across ten countries between 1982 and 2007. Profitability dispersion level and its time-series behavior vary by year and by country. Both accounting and economic factors cause this phenomenon. Using aggregate data, we report evidence that the dispersion is significantly related to income smoothing, discretion in reported earnings, the presence of small firms, and macro firm performance. The presented results are almost robust to the definition of profitability dispersion and differences of legal system. Our research contributes to the literature on international differences in earnings properties.

Suggested Citation

  • Nakano, Makoto & 中野, 誠 & Aoki, Yasuharu, 2016. "What Explains Widening Profitability Dispersion Around The World?," Hitotsubashi Journal of commerce and management, Hitotsubashi University, vol. 50(1), pages 23-46, October.
    • Handle: RePEc:hit:hitjcm:v:50:y:2016:i:1:p:23-46
    DOI: 10.15057/28214
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    Cited by:

    1. Fu, Jiangtao & Ogura, Yoshiaki, 2019. "Are Japanese companies less risky and less profitable than US companies? Evidence from a matched sample," Japan and the World Economy, Elsevier, vol. 51(C), pages 1-1.
    2. Hsihui Chang & Souhei Ishida & Takuma Kochiyama, 2018. "Evaluation of Managerial Ability in the Japanese Setting," The Japanese Accounting Review, Research Institute for Economics & Business Administration, Kobe University, vol. 8, pages 1-22, December.

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    More about this item

    Keywords

    profitability dispersion; earnings management; small firms;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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