Use of company intellectual capital information in some Japanese financial firms Structured abstract:Purpose -The purpose of this paper is to explore the perceptions of (1) how Japanese Financial Institutions (JFF) acquire and use company intellectual capital (IC) information in their common routine equity investment decisions, (2) how this activity contributes to knowledge creation in the JFFs, and (3) how investee company knowledge creation is affected by the JFF's.Design/methodogy/approach -The research employed a multi-case design, using four JFF cases. The JFFs and their IC use were discussed in terms of Nonaka and Toyama's 'theory of the knowledge creating firm ' (2005). The associated concepts of 'Ba', 'SECI' and 'Kata' were conceptually located within the internal and external order emerging in the cases and were used to analyze JFF knowledge creating behavior. Despite the limits to SECI or Kata processes noted in the cases, these concepts were valuable in analyzing the case data.Findings -Company IC information contributed to earnings estimates and company valuation. Emotional information about intangibles contributed to JFF feelings and confidence in their information use and valuation. JFF knowledge was an important component of the key interacting and informed contexts used by JFFs to make collective sense of these different but complementary types of information in knowledge creation. This generated opportunities to improve disclosure and accountability between JFFs and their investee companies. Common patterns of behaviour across the JFFs were counterbalanced by variety and differences noted in JFF behaviour.Practical implication -The findings provide important insights in how JFF knowledge creating patterns could limit or progress a common language of communication between companies and markets on the subject of IC. This could impact on the quality of corporate disclosure and accountability processes. The results will be used in the context of a further IC disclosure development in Japan.Originality -The paper demonstrates that there is a need for further use of qualitative studies of financial market behavior. Especially in the area of understanding the communication of IC between firms and financial market agents, the potential of using sociology of finance approaches appears to be considerable.

This study is based on a survey of 324 financial analysts in Japan. The survey concerns analysts’ perceptions of intellectual capital (IC) information and its links to the evaluation of companies. The value relevance of and the access to IC‐related information reveals a large gap on many items. The analysis further shows that the lack of access to information hampers analysts’ use of IC in their evaluation of companies, particularly in their use of human capital measures. Attitudes towards more disclosure and standardisation are mainly driven by perceptions of what generates value in companies.

We report on a seasonal pattern that has persisted in the Japanese stock market for more than half a century: mean stock returns are significantly positive for months during the first half of the calendar year and significantly negative for months during the second half. Dubbed the "Dekansho-bushi effect," this seasonality is independent of other known calendar anomalies, such as the so-called January effect. The Dekansho-bushi effect should be distinguished from the "sell in May effect," since Japanese stocks perform well in June and poorly in November and December. The Dekansho-bushi effect varies in magnitude among firms and is particularly significant among small firms with low book-to-market ratios. Nonetheless, the effect exists, regardless of a company's size or book-to-market ratio.

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We report on a seasonal pattern that has persisted in the Japanese stock market for more than half a century: Mean stock returns are significantly positive for months during the first half of the calendar year and significantly negative for months during the second half. Dubbed the Dekansho‐bushi effect, this seasonality is independent of other known calendar anomalies, such as the so‐called January effect. The Dekansho‐bushi effect should be distinguished from the ‘sell in May effect,’ because Japanese stocks perform well in June and poorly in November and December. The Dekansho‐bushi effect varies in magnitude among firms and is particularly significant among small firms with high book‐to‐market ratios. Nonetheless, the effect exists, regardless of a company's size or book‐to‐market ratio.