The purpose of this paper is to theoretically explain the relationships between the characteristics of shareholdings in Japanese firms and earnings management. Using a method of game theory, we had two-period model analysis in which the players are a manager and a shareholder. The results are summarized as follows:

(1)Japanese firms tend to manage earnings regardless of the characteristics of shareholdings.

(2)The tendency of earnings management depends upon the characteristics of shareholdings. Firms whose main shareholders are mutual holding firms have the strongest tendency. The firms which are governed by banks have the second strongest. Those which are governed neither by mutual holding firms nor by banks have the weakest.

The 2008 annual meeting of the Association of Japanese Management Accounting was held at Konan University, Japan from August 29 to August 31, 2008. The purposes of this paper are to summarize four reports for presenting the results of their research under the unified theme: Intangibles in management accounting, put some important discussion points at issue in order, and formulate a new direction for future research in management accounting, from the perspective of intangibles. Each specific sub-theme of four reporters is “Intangibles and firm value” by K. Ito, “Issues in firm valuation” by S. Aoki, “The impact of market inefficiency on TOB strategies in Japan” by T. Yamamoto, and “U.S. perspective of intangible assets and its applicability in Japan” by K. Koga. Each report was very creative and significant. The useful comments for four reports by commentator N. Ogura promoted active panel discussion.

Creating firm value or shareholders value is expected for company management, however, the concept of firm value is vague. Ingenuity, subjectivity and inference are required for estimation of free cash flow and cost of capital. The amount of intangibles measured using DCF differs significantly from amounts using other models. While R&D assets are major components of intangibles, brand assets are minor. In terms of the relationship between shareholder value and stock price, terminal value has a stronger relationship than period value; and shareholders value has a stronger relationship in the Residual Income Model (RIM) than in DCF. We should measure flexibly firm value by taking account of a firm's individuality rather than simplistic statistical analysis.

M&A is a useful method of effective use of resources among firms and of corporate governance. However, a TOB in Japan is greatly interrupted by market inefficiency, and this inefficiency is caused by the psychology of investors and the custom of cross-shareholding.

The realizable strategy for the success of a TOB in such an inefficient market is to promise to employ the management of a target firm after the TOB and give the minimum rents that induce them to agree to it

Intangible assets generate economic values in two ways: by maximizing individual asset's productivity, and by maximizing the joint-productivity among the assets through synergy. The contrast between the two is well illustrated in the human resource management. Management accounting research in the U.S. has focused on the management accounting's decision motivating function that enhances each worker's productivity, but paid little attention to the decision facilitating function that improves the joint-productivity among the workers. Because Japanese organizations emphasize the coordination and cooperation among the workers, management accounting research in Japan can make significant contribution to the world by exploring the decision facilitating function of management accounting. Another promising research venue is the interaction between the decision facilitating and decision motivating functions.