The Japanese Accounting Review
Online ISSN : 2185-4793
Print ISSN : 2185-4785
ISSN-L : 2185-4785
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reserch-article
  • Jumpei Hamamura
    Article type: reserch-article
    2024 Volume 14 Issue 1 Article ID: 14.2024.01
    Published: 2024
    Released on J-STAGE: December 26, 2024
    Advance online publication: June 14, 2024
    JOURNAL FREE ACCESS
    This study demonstrates that, in two periods, the total profit of a firm in product market competition decreases with a leading indicator that emphasizes consumers. While previous studies in the management accounting literature have suggested that leading indicators are useful for predicting firms’ future profits, few studies have theoretically investigated this topic. Therefore, we explore the usefulness of leading indicators to improve firms’ long-term profit using a game theoretical approach. Consistent with empirical evidences, our model analysis demonstrates that a leading indicator improves firms’ profits in the second period, while it harms first-period profit and total profit due to excessive supply in a specific economic environment.
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