It is important to understand the concept of Kiai. The word is composed of two Japanese words, "ki" meaning "energy," and "ai" meaning "to meet with." "Ki" also means "breath." The kiai is a shout delivered by the karateka (karate practitioner) and is most usually heard when delivering a strike. The combined meaning of the words implies that kiai may be interpreted as a kind of energy that accompanies the strike.
There are two main reasons for using the kiai. One is to frighten, distract, or disconcert, the opponent. The other is to tighten the muscles and empty the breath from the body to prevent injury. This is why kiais are heard both when striking an opponent and when taking a fall.
Expulsion of the air from the body prevents ruptures to the lungs and other organs which may be caused by violent expulsion of trapped air during the impact of a fall. A third reason for use is that the kiai focuses the ki, making the strike more powerful.
The kiai should originate from the hara, a spot located two inches below the navel, which Eastern cultures believe is the central storage place of the body's ki, or life energy. (This area is usually referred to as the diaphragm when talking about breath control and sound production.) The effective kiai must originate from the hara, tighten the muscles of the body (starting from the pelvic area), expel all the air from the lungs and chest cavity, and be loud and intimidating.
In kendo, classical Japanese sword training, only three syllables are permitted for kiai: "eh," "ya" and "toh." Each of these syllables is voiced with a strong start and strong stop, but they are subtly different in how they connect the body and how they link to both the technique initiation and impact.
In karate, each person must experiment individually, since each body is different, but in no case should the word "kiai" ever be used as a kiai. Not only is it equivalent to shouting the word "shout," but it also has two syllables with a weak transition. (from http://americasfinestshotokan.com)