We investigate whether the Japanese financial reform, the so-called, “Takenaka Plan,” succeeded in improving the credibility of bank disclosure by examining how market participants responded to three important events in 2003: the release of a new package of monetary policies and failures of Resona Bank and Ashikaga Bank using event study methodology. The response to failures of Resona and Ashikaga reveals that bank shareholders differentiate individual banks by their financial conditions whereas the response to the monetary package shows no evidence such of discrimination. This suggests that Takenaka plan seems to have improved the credibility of bank disclosure to some extent.
