|
Does Segment Profitability Reporting Matter?
Shu - Miao Lai, National Chengchi University
Chih - Liang Julian Liu, National Taiwan University
Tay - Chang Wang, National Taiwan University
ABSTRACT. The “management approach” of SFAS No. 131 creates an opportunity for us to investigate the value implication of segment profit reporting from a user perspective. We find that adoption of SFAS No. 131 increased the transparency of segment profit reporting for a sample of S-M firms that previously reported as single-segment firms and initiated segment disclosure with SFAS No. 131. However, capital market cannot fully capture the relevant information from segment profit reporting for a sample of M-M firms that pre-131 multi-segment firms and remained multi-segment with SFAS No. 131. These results are robust under alternative measures of industry competition, providing strong evidence that SFAS No. 131 increased the competitive harm of segment profit disclosures for M-M firms as disincentive to detailed segment profit reporting. Overall, we provide evidence to suggest that SFAS No. 131 were motivated to an increase on potential proprietary costs for M-M firms.
Full-Text is no longer available online. Please contact the author(s) for more information about this manuscript.
Back to Session Listing
|