scholarly journals Managers Segment Financial Reporting Choice: An Analysis Of Firms Segment Reconciliations

2012 ◽  
Vol 28 (6) ◽  
pp. 1413 ◽  
Author(s):  
Elio Alfonso ◽  
Dana Hollie ◽  
Shaokun Carol Yu
Keyword(s):  
Financial Reporting ◽  
Agency Costs ◽  
Policy Implications ◽  
Future Research ◽  
Firm Level ◽  
Earnings Volatility ◽  
Segment Reporting ◽  
Segment Disclosures ◽  
A Company ◽  
Number Of Segments

Under SFAS No. 131, a company is required to provide a reconciliation of the total of the reportable segments profit or loss to the firms consolidated income. This paper investigates these segment disclosures and related determinants of managers segment financial reporting choices. We focus on managers decisions to report segment-to-firm level reconciliations (i.e., segment reconciliations (SERs)) differences between firm-level and aggregated segment-level earnings. On average, we find that SERs are significant when the differences are not equal to zero. Firms with higher agency costs and greater accruals are less likely to report segment reconciliations. However, firms that have a greater number of segments, larger firms, and firms with higher leverage, losses, and greater earnings volatility are more likely to report SER?0. Consistent with managers having some segment reporting discretion, our overall findings suggest a managers segment reporting choice is partly driven by agency costs. Interestingly, among firms with reported segment reconciliations, firms with higher agency costs are more likely to report positive SERs. Consequently, this study documents a relation between proxies for agency costs and managers decisions to report segment reconciliations. Policy implications and suggestions for future research are discussed in the paper.

scholarly journals Do Reconciliations Of Segment Earnings Affect Stock Prices?

2012 ◽  
Vol 28 (5) ◽  
pp. 1085 ◽  
Author(s):  
Dana Hollie ◽  
Shaokun Carol Yu
Keyword(s):  
Financial Reporting ◽  
Stock Prices ◽  
Firm Growth ◽  
Abnormal Returns ◽  
Cash Flows ◽  
Management Approach ◽  
Firm Level ◽  
Return On Equity ◽  
The Difference ◽  
Segment Disclosures

While SFAS No. 131 is intended to increase the transparency of financial reporting using a management approach, it may reduce shareholders ability to interpret segment disclosures relative to the industry approach employed under SFAS No.14. This study investigates whether segment reconciliation differences affect stock prices and whether abnormal returns can be earned using information about two components of earnings: aggregated segment earnings and segment earnings reconciliations. We compute reconciliations as the difference between firm-level consolidated earnings and aggregated segment-level earnings. Firms that report negative SERs have greater sales and profitability, greater return on equity, as well as more operating cash flows and firm growth. This suggests that firms that report aggregated segment earnings greater than firm-level consolidated earnings may be better off financially. Our findings show that mispricing does occur when firms report positive SERs by the market, underestimating the segment earnings reconciliation component of earnings persistence. Investors can also earn positive abnormal returns when investors take a long (short) position with the portfolio with the highest (lowest) absolute SERs. On the contrary, we find investors earn negative abnormal returns when firms report negative SERs. Collectively, this study provides evidence that mispricing occurs and that investors over/underestimate the importance and/or persistence of segment earnings reconciliations.

scholarly journals Los factores explicativos de la divulgación por segmentos en entidades no financieras cotizadas en los mercados europeos

2018 ◽  
Vol 63 (2) ◽  
pp. 36
Author(s):  
Pedro Amado ◽  
Fábio Albuquerque ◽  
Nuno Rodrigues
Keyword(s):  
Financial Reporting ◽  
Stock Index ◽  
The European Union ◽  
Barriers To Entry ◽  
Accurate Analysis ◽  
Segment Reporting ◽  
Financial Reporting Standards ◽  
Explanatory Factors ◽  
Segment Disclosure ◽  
Segment Disclosures

<p><span lang="EN-US">Segment reporting (external) is a relevant tool for investors and other stakeholders, as the information is presented in a divisional way, enabling more accurate analysis to be made for decision making. Howe­ver, reporting entities do not always assure the inherent potential of segment reporting. This research aims to identify the explanatory factors that may influence the level of segment disclosure. For this purpose, we have investigated the segment disclosures presented in accordance with the International Financial Reporting Standards (IFRS) 8 of the International Accounting Standards Board (IASB), as adopted by the European Union, based on consolidated reports and accounts (for the year 2015) of a sample of 91 entities from the Portuguese Stock Index (PSI-20), <em>Cotation Assistée en Continu </em>(CAC-40), <em>Deutscher Aktie­nindex </em>(DAX-30) and OMX Nordic 40 (OMX-N40). The findings indicate that size is directly related to both the number of operating segments disclosed and the level of disclosure required for each segment. Further, the latter seems to be also influenced by the existence of barriers to entry (directly) and the degree of internationalisation (inversely).</span></p>

Factors affecting the development of accounting practices in Jordan: an institutional perspective

2018 ◽  
Vol 26 (4) ◽  
pp. 464-486 ◽  
Author(s):  
Yasean Tahat ◽  
Mohamed A. Omran ◽  
Naser M. AbuGhazaleh
Keyword(s):  
Financial Reporting ◽  
Policy Implications ◽  
Institutional Factors ◽  
Future Research ◽  
Economic Factors ◽  
International Accounting ◽  
Institutional Perspective ◽  
Foreign Investments ◽  
Content Type ◽  
Business Entities

Purpose Based on the institutional theory, the purpose of this paper is to examine institutional factors that affect the development of accounting practices in Jordan. Design/methodology/approach The current study surveys the perceptions of 306 participants and 20 interviewees. Findings First, the early formation of accounting practices in Jordan has been affected by the legacy of Ottoman Empire’s and the British Colony’s accounting systems. Second, the results indicate that government of Jordan (regulatory frameworks), pressures from international donors and large economic organizations (politico-economic factors), education and training/development (cultural inputs), and the efforts to attract foreign investments and getting access into the international fund and trade (economic factors) have been influential influences in the development of accounting practices and the adoption of International Accounting Standards/International Financial Reporting Standards (IAS/IFRS) in Jordan. Finally, the findings reveal that “Secrecy” construct (a culture input) has been a problematic in the implementation of IAS/IFRS. Practical implications The current study provides policy implications for the Jordanian policy makers and for other developing countries that are working hard to improve the quality of financial reporting of their business entities. Finally, the authors suggest some great opportunities for future research. Originality/value First, this paper contributes to Jordan’s policy developments including fundamental strategies in terms of attracting foreign investments to expand the economy and the international and regional trade. Second, it fills a gap in the international accounting research by empirically assessing how institutional factors affect the development of accounting practices in emerging country such as Jordan.

scholarly journals Exposure to unethical behaviour: does it change accounting firms’ ethical stance?

2014 ◽  
Vol 11 (2) ◽  
pp. 319-327
Author(s):  
Connie Zheng ◽  
Soheila Mirshekary
Keyword(s):  
Reasoned Action ◽  
Policy Implications ◽  
Organizational Level ◽  
Future Research ◽  
Firm Level ◽  
Accounting Firms ◽  
Unethical Behaviour ◽  
Personal Attitudes ◽  
Ethical Stance ◽  
Policies And Practices

Decisions to implement ethical policies and practices at the organizational level are assumingly influenced by two key factors: (1) the extent to which businesses are exposed to prevalent unethical behaviours; and (2) change of business owner/manager’s personal attitudes toward unethical behaviours. Based on the theories of planned behaviour (TPB) and reasoned action (TRA), it is hypothesised that exposure leads to changed personal attitudes of individual business owners/managers, which in turn determine the potential actions taken by them to implement ethical policies and practices in their respective firms. Using a sample of 209 Australian small accounting firms, we test these hypotheses. Path analysis results indicate close relationships between the exposure and firm owners/managers’ personal attitudes towards unethical behaviour; and between the exposure and firms’ decisions to implement ethical policies. Increased exposure to unethical behaviour is nonetheless a concern as it triggered stronger personal attitudes towards accepting unethical behaviour. However, more exposure to unethical behaviour creates motivates owners/managers of small accounting firms to take actions and implement more ethical policies and practices at firm level. Policy implications of these results and future research directions are discussed.

scholarly journals The relevance of segments reports – measurement methodology

2017 ◽  
pp. 0-0
Author(s):  
Tomasz Zimnicki
Keyword(s):  
Stock Exchange ◽  
Financial Statements ◽  
Reporting Standards ◽  
Segment Reporting ◽  
Warsaw Stock Exchange ◽  
Measurement Methodology ◽  
Feature Relevance ◽  
Segment Disclosures ◽  
A Company ◽  
Activity Areas

The segment report is one of the areas of financial statements, and it obliges a company to provide infor-mation about the economic situation in each of its activity areas. The article evaluates the change of segment reporting standards from IAS14R to IFRS8 in the context of feature relevance. It presents the construction of a measure which allows the relevance of segment disclosures to be determined. The created measure was used to study periodical reports published by companies listed on the main market of the Warsaw Stock Exchange from three reporting periods – 2008, 2009 and 2013. Based on the re-search results, it was found that the change of segment reporting standards from IAS14R to IFRS8 in the context of relevance was legitimate.

scholarly journals Corporate characteristics of listed companies engaging in web-based financial reporting in emerging economies

2016 ◽  
Vol 13 (4) ◽  
pp. 66-80 ◽  
Author(s):  
Peter B. Oyelere ◽  
Nirosh T. Kuruppu
Keyword(s):  
United Arab Emirates ◽  
Financial Reporting ◽  
Emerging Economies ◽  
Voluntary Disclosure ◽  
Policy Implications ◽  
Future Research ◽  
Stock Exchanges ◽  
Firm Characteristics ◽  
Web Based ◽  
The Web

We investigate the key corporate characteristics of using the web for voluntary disclosure of financial information in an emerging economy by companies listed in the United Arab Emirates (UAE). The 132 companies listed on two stock exchanges were investigated to ascertain whether they engage in web-based financial reporting (IFR) or not. Eighty-eight of the companies (about 67%) were found to use their websites for IFR. Similar to prior studies in this area, logistic multiple regression was used to isolate the key corporate characteristics of IFR companies (IFRC) from non-IFR companies (N-IFRC). Results indicate firm size and leverage to be the key determinants of voluntary IFR adoption. Surprisingly, other traditional firm characteristics, such as profitability, industry and liquidity do not explain IFR practices. Policy implications of these findings, as well as the limitations of the study, which provide potential areas for future research, are also discussed.

scholarly journals Determinants of Regulatory Burdens on Non-listed Small Corporations in Australia: Perceptions of Small Corporations’ Owners/Managers

2012 ◽  
Vol 7 (1) ◽  
Author(s):  
Yongqiang Li ◽  
Anona Armstrong ◽  
Andrew Clarke
Keyword(s):  
Policy Decision ◽  
Regulatory Compliance ◽  
Decision Makers ◽  
Policy Implications ◽  
Future Research ◽  
Compliance Cost ◽  
Firm Level ◽  
Australian Economy ◽  
Future Research Directions

Small corporations are the engine room whilst the forgotten corner of the Australian economy. Regulatory burdens are hampering the small corporations from performing to their optimal, which consequently impairs the economic growth of the nation. For policy decision makers, quantifying the regulatory compliance cost is the first priority for evidence-based de-regulatory reforms. Thus, policy options proposed are of practical imperative to future de-regulation reforms. Prior research supporting the estimation and determination of regulatory compliance cost are at a dearth. This paper fills the gap by estimating the regulatory compliance costs of small corporations using the firm level survey data. A non-parametric logit model, Generalised Ordered Logit/Partial Proportional Odds Model (gonlogit2), is developed to estimate the impacts of determinants on regulatory costs. The paper concluded with a discussion of policy implications and future research directions.

The adoption of IFRS 8 – no headway made? Evidence from segment reporting practices in Germany

2015 ◽  
Vol 16 (1) ◽  
pp. 88-113 ◽  
Author(s):  
Nina Franzen ◽  
Barbara E. Weißenberger
Keyword(s):  
Economic Benefits ◽  
Future Research ◽  
Management Approach ◽  
Specific Information ◽  
Content Type ◽  
Reporting Practices ◽  
Segment Reporting ◽  
Ifrs 8 ◽  
Segment Disclosures ◽  
The Impact

Purpose – The purpose of this paper is to assess the changes in segment reporting practices of German listed firms under the new segment reporting standard IFRS 8. Design/methodology/approach – The authors compare hand-collected segment disclosures of German firms in the first IFRS 8 year with those reported in the last IAS 14R year. Findings – The authors do not find substantial changes in the segment disclosures of German firms under IFRS 8. While the number of reportable segments slightly increased, the amount of information disclosed for each reportable segment decreased. The same applies to geographic areas reported as secondary segments under IAS 14R compared to entity-wide disclosures under IFRS 8. Furthermore, even though more country-specific information was provided, many firms still disclosed only broad geographic areas. Research limitations/implications – Future research should extend the analysis to consider more than one year of data following IFRS 8’s adoption and to examine the impact of the standard on smaller firms. Moreover, investigating economic benefits for investors and other financial statement users following IFRS 8’s adoption could be an avenue for future research. Practical implications – The findings indicate that the International Accounting Standards Board’s (IASB) expectations regarding changes in segment reporting practices under IFRS 8 have only partially been met. The results also reveal some cases of segment reporting practice where compliance is at least questionable. Both findings are of interest to standard-setters and regulators. Originality/value – The paper provides new insights into the effects of IFRS 8’s adoption in Germany and thus contributes to the post-implementation review of IFRS 8 carried out by the IASB in 2012/2013. The study sheds light on the consequences of applying the “management approach” to segment reporting, thereby contributing to the theoretical discussion on the adequacy of the different concepts for disclosing segment information.

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