An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Ole - Kristian Hope
University of Toronto

Wayne Thomas
University of Oklahoma

Glyn Winterbotham
University of Oklahoma

Abstract: Under the provisions of Statement of Financial Accounting Standards No. 131 (SFAS 131), Disclosures about Segments of an Enterprise and Related Information, geographic earnings are no longer a required disclosure for most U.S. multinational companies. As a result, most firms no longer disclose this information in their annual reports. Using the model derived in Kim and Verrecchia (1997), we consider whether this reduction in public disclosure impacts investors’ private information. Consistent with their model, we find that decreased public information (i.e., non-disclosure of geographic earnings) reduces the ability of investors to utilize or generate private information in conjunction with the public announcement of quarterly earnings, which dampens trading.

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