We analyze the impact of IFRS 8 on the usefulness of segment reports from an investor's perspective. The analysis comprises three steps. First, we compare the value relevance of segment reports before and after the introduction of IFRS 8. Second, we analyze a treatment group of firms that had to change their segmentation upon IFRS 8 adoption and a control group that was unaffected by its introduction. Third, the requirement to report financial information for the current and previous year under current accounting rules allows us to analyze a unique data set of segment reports for the same company and the same year under two different standards. Our results based on German listed firms show superior value relevance of segment reports according to IFRS 8 compared to IAS 14 in all three steps. Additional analyses suggest that the adoption of IFRS 8 is also related to a decline in information asymmetry. Our findings are robust to a number of alternative specifications.
ABSTRACTWe exploit a regulatory change in Singapore to analyze the capital market effects of mandatory quarterly reporting. The listing rule implemented in 2003 has required firms with a market capitalization above S$75 million—but not firms with a market capitalization below this threshold—to publish quarterly financial statements. Using regression discontinuity analysis for our identification, we provide novel evidence of the causal effects of mandatory quarterly reporting on small firms. We find a 5 percent decrease in firm value, consistent with the notion that mandatory quarterly reporting is perceived as a net burden for small firms. Contrary to popular belief, we cannot find evidence of informational benefits or myopic investment for firms around the threshold. Additional tests suggest positive information spillover effects from large mandatory quarterly reporters to non-quarterly reporting firms.JEL Classifications: M41; M48.
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