The price-to-earnings ratio for Japanese firms is frequently higher than it is for U.S. firms because Japanese accounting procedures reduce reported profits.

Question

Quizplus · Accepted Answer

Japanese accounting procedures tend to be more conservative and require companies to allocate a portion of their profits to reserves rather than report them as earnings, resulting in lower reported profits and a higher price-to-earnings ratio.

The Price-To-Earnings Ratio for Japanese Firms Is Frequently Higher Than