Purpose -To empirically examine the changing pattern of competitive disadvantage experienced by the reporting companies in disclosing segmental information in the Malaysian environment. Design/methodology/approach -The study consists of a final sample of 116 Malaysian companies listed on the Malaysian Bourse for the years 2000-2002. Four hypotheses were developed to investigate the relationship between segmental information disclosure and competitive disadvantage. Adopting weighted average correlation (WAC) techniques and total performance index (TPI), a multivariate least square regression model was employed to test the four formulated hypotheses. Findings -The statistical analysis employed provides a mixed pattern yet comprehensive understanding of relationship between segmental information disclosure and competitiveness level among 116 reporting companies listed in Malaysian Bourse from the years of 2000-2002.Research limitations/implications -The proprietary theory assumes at least two forms that differ on the basis of who are included in the proprietary group. Secondly, the existence of discretionary judgments among managers in determining the segment definition, items to be disclosed and level of materiality involved. Lastly, the size of final sample leads to caution in generalizing the analysis. Practical implications -The results provide insights to interested groups such as accounting standard bodies, affected companies and the accounting profession, specifically in the Malaysian environment with the introduction of the new standard on segmental information disclosure known as MASB 22 segment reporting. Originality/value -The study is very timely especially with the introduction of new accounting standard governing segmental reporting by companies in Malaysian financial reporting environment. The great value of this study is highlighted by the effort to empirically investigate the competitive disadvantage experienced by the reporting companies as they disclose segmental information as required by the new standard.
PurposeThis paper seeks to investigate the level of competitive disadvantage experienced by Malaysian listed companies by disclosing segmental information as required by the new accounting standard on segments disclosure by Malaysian Accounting Standards Board.Design/methodology/approachA total of 116 Malaysian listed companies are included in the study. Their annual reports for financial year ended 2002 are the main sources. The dependent variable is competitive disadvantage, which is proxied by Total Performance Index. The independent variables are quality of segmental disclosure by employing weighted average correlation technique, size of companies, the use of stricter accounting standard and the choice of business segment or geographical segment as the primary segment. To examine the developed hypotheses of the study; a multivariate least square regression model is employed. The analysis is also supported by correlation technique.FindingsThe outcomes of the study indicate that competitive disadvantage exists by disclosing segments information but it is not significant. In addition, larger companies experience greater competitive disadvantage than smaller companies, more extensive segment disclosure standard leads to less competitive disadvantage and the state of competitive disadvantage is greater when geographical segment is disclosed as the primary segment.Research limitations/implicationsSince the standard allows the reporting companies to disclose their segment information based on internal structure of the organization, the potential existence of materiality judgement may distort the comprehensiveness of the outcome. In addition, the limited number of companies included in the final sample leads to a more cautious approach in generalizing the findings.Practical implicationsSince the new accounting standard governing segment disclosure in Malaysian environment took effect in 2002, the study is considered timely. It allows the relevant accounting bodies to continue monitoring the level of compliance among the listed companies towards the new standard and, more importantly, it permits further improvement of the standard given the level of competitive disadvantage that may be experienced by reporting companies.Originality/valueThe remarkable contribution of the study lies in its timely effort to investigate the potential competitive disadvantage suffered by reporting companies in the first year of the implementation of the new accounting standard governing segment disclosure.
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