Cristi A. Gleason
The University of Arizona
Abstract: This paper examines the proprietary costs of line-of-business (LOB) reporting by contrasting voluntary reporters of segment information with firms who disclosed segment data only when required to do so (mandated reporters). The empirical findings support the theoretical expectation that the expected proprietary costs of LOB reporting exceeded the expected benefits for mandated reporters. Mandated reporters had higher levels of market power and faced greater expected costs from competitor entry, pressure from labor groups, suppliers and customers, and government regulation. However, the results do not provide any evidence that these mandated reporters subsequently incurred the expected proprietary costs. Instead, I find that voluntary reporters were more likely to obtain financing during the voluntary reporting period, suggesting that differing benefits rather than proprietary costs distinguish voluntary and mandated reporters.
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