Tokyo, Japan – Sony's board is likely to reject a US hedge fund's proposal to spin off part of its profitable entertainment arm, a report said on Thursday, as the electronics giant prepares to report its quarterly results. Japan's leading Nikkei business daily said the firm's directors discussed the idea on Wednesday and were leaning towards turning the proposal down after reviewing a financial advisor report on the deal. Some directors argued that Sony can compete better as a whole firm instead of hiving off part of the entertainment division, the Nikkei said without citing sources. US billionaire Daniel Loeb, who says his hedge fund Third Point has amassed the largest stake in Sony, called on the Japanese firm's executives to spin-off up to 20% of the unit, which includes a music label and Hollywood movie studio. Loeb, known for his aggressive style in stoking change at target firms, initially took a softer approach by praising Sony chief Kazuo Hirai's bid to turn the company around after years of losses. Hirai has resisted previous calls to break up the electronics giant. In June, he told an annual investor meeting in Tokyo that the company's board was studying the proposed plan from "all sorts of angles", but said it would not be rushed into a decision. Loeb had argued the spin-off would make the entertainment unit's managers more accountable and help improve profitability. In a quarterly letter to investors this week, Loeb struck a harder tone, saying corporate culture in the subsidiary was "characterised by a complete lack of accountability and poor financial controls". The division "remains poorly managed, with a famously bloated corporate structure, generous perk packages, high salaries for underperforming senior executives, and marketing budgets that do not seem to be in line with any sense of return on capital invested", Loeb wrote. He added that "drastic - rather than incremental - action is required". Sony's shares slipped 0.87% to 2,050 yen in early afternoon trade. It will report fiscal first quarter earnings results later on Thursday.