Role of Country-Level Characteristics in Segment Reporting: EU Evidence

Based on a country-level-characteristics framework, we empirically tested the impact of IFRS 8 adoption, the country’s legal system and level of legal enforcement, investor protection, conservatism, and closeness between national GAAP and IFRS on both the quantity and quality of segment reporting. Using a sample of companies from 15 EU countries covering four years (two years preadoption and two years postadoption of IFRS 8), we found that the adoption of IFRS 8 is associated with a decrease in the quantity and an increase in the quality of segment reporting. Moreover, we report that a common-law system, the country-level legal enforcement, and investor protection have a significant and positive impact on the quantity and quality of segment reporting. Meanwhile, country-level conservatism and closeness between national GAAP and IFRS are negatively related to the quantity and quality of segment reporting. In addition to firm-level characteristics, this study extends the prior limited literature by documenting the importance of country-level characteristics as factors that enhance segment reporting practices in Europe. We also discuss the research contributions and implications for research, professional practice, and policymakers.

International Accounting Standards (IAS). Transition of Existing to New Accounting Standards in a Rapid Changing Environment. The Impact of Adoption of New Accounting Standards in the Developed Economies in European Union. Conclusions, Expectations and Perspectives

Adopting a set of accounting standards on a global level derives from the growing globalization of international economies. However, the transition from old to new ones is challenging in a rapidly changing economic environment. This article presents an assessment of IFRS 8 (Operating Segments) adoption, after replacing IAS 14 (Segment Reporting), and examines the impact occurred in the developed economies within the EU, with relevant considerations referring to the current COVID-19 global pandemic situation.This study analyzes the effect of this controversial standard on segment reporting and attempts to identify the determinants of changes in disclosure practices. Based on a four country sample, the current research identifies specific significant financial information changes, although segmentation remains relatively stable. Furthermore, the study includes relevant considerations on reporting, as reflected from current COVID-19 pandemic.The present research includes a historical reference to the development of the accounting standards under examination. Conclusions, expectations, and future perspectives are also presented in the paper.

Does International Financial Reporting Standard 8 improve the firms' information environment?

PurposeThis article analyzes the effect of International Financial Reporting Standard (IFRS) 8 on the informational content of segment data. It aims to assess the change in quality of the financial analysts' and the shareholders' information environment due to the new segment reporting standard to verify the International Accounting Standards Board’s (IASB) expectations and the conclusions of its post-implementation review.Design/methodology/approachBased on a sample of 250 companies listed on Euronext Paris in France, a country with poor legal protection for shareholders, over a nine-year period, the authors test whether the new standard makes the financial analysts' forecasts more accurate and reduces the implied cost of equity capital.FindingsThe findings show that IFRS 8 partially improves the informational content of segment data, partially supporting the outcome of IASB. The management approach may have forced some firms to change their segmentation to provide a more economic view of the business. The poor legal protection for shareholders in France may explain this result.Research limitations/implicationsDue to proprietary and agency costs, firms may withhold segment information whatever the standard used.Practical implicationsThis study contributes to the ongoing debate about IFRS 8 and may interest financial statement users and the international standard-setter for such a criticized standard.Originality/valueThe results contribute to the segment reporting literature by addressing the partial improvement of information environment under the managerial approach in a country with lower investor protection.

The State of Segment Reporting by US Public Entities: 1976-2017

This paper offers an in-depth data driven overview of the history and status as of 2017 of segment reporting by public entities trading in U.S. capital markets. Our analysis focuses on the perceived issues identified in the Financial Accounting Standards Board (FASB) 2016 Invitation to Comment on FASB's Agenda - the extent of disaggregation into reportable segments, the stability of segmentation over time, the line-items disclosed, and the reconciliation of segment to consolidated totals. We document the trends in and status of segment reporting as of 2017 as another round of efforts to improve segment reporting proceeds. The paper concludes with a discussion of several unanswered questions suggested by the data. Keywords: Segment disclosures, SFAS 131, SFAS 14, ASC 280.

Information Value of the Segment Reporting in the Polish Energy Sector

Conventional energy sources dominate in the Polish energy sector, which is a huge risk to meeting environmental protection requirements. Polish energy companies are facing challenges related to meeting the requirements of the European Union and the National Energy Policy. The paper attempts to answer the question whether the ongoing discussion on the future of the energy sector, dealing with such issues as development of renewable energy sources is reflected in the annual financial reports of companies listed on the Warsaw Stock Exchange and covered by the WIG_ENERGY index. This study contributes to the extant literature on financial disclosures in several ways. First, the examination of compliance of segment reporting of selected companies listed on the Polish stock exchange with International Reporting Standards (IFRS) was carried out (particularly IFRS 8 – Operating Segments). Second, the information value of disclosures for investors in the energy industry was assessed. The empirical part was preceded by a description of segment reporting principles in accordance with IFRS 8 and the summary of challenges facing the energy sector in Poland.