Changing pattern of competitive disadvantage from disclosing financial information

Abstract

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.

Impact of Corporate Governance on Social and Environmental Information Disclosure of Malaysian Listed Banks: Panel Data Analysis

“…Due to that they might discourage the higher disclosure. Finally, Santema et al (2005), Talha, Sallehhuddin and Mohammad (2006) and Lu et al (2007) mention the disadvantage of information disclosure. According to Santema et al (2005), general disclosure costs consist of the cost of gathering, processing and auditing and disseminating the information, as well as possible litigation costs and cost that might create competitive disadvantage.…”

“…According to Santema et al (2005), general disclosure costs consist of the cost of gathering, processing and auditing and disseminating the information, as well as possible litigation costs and cost that might create competitive disadvantage. Talha et al (2006) who study the segmental reporting practice in Malaysia mention that the cost of disclosure includes competitor pressure, political pressure and customer pressure. Lu et al (2007) highlight that information disclosure may reduce shareholder value by revealing valuable information to competitors or by increasing legal costs for the firm even though they recognize the advantages of disclosure such as increase in institutional interest and liquidity of the firms and consequently there will be lower cost of capital and public relation benefits (Santema et al, 2005).…”

Impact of market and organizational determinants on voluntary disclosure in Egyptian companies

“…The relationship between disclosing financial information including segmental data and competitive disadvantage will be affected by the proprietary cost, where companies have an incentive to disclose more financial information to the market in order to reduce information asymmetry in the absence of proprietary costs (Talha et al, 2006).…”

Firm Characteristics and Voluntary Segments Disclosure among the Largest Firms in Nigeria

“…Reference [17] finds a significant positive relationship between voluntary disclosure and firm size, measured as the natural logarithm of total asset. References [18], [19] asserted that company size might have a substantial effect on the level of disclosure. Specifically, these aforementioned researches have reported that huge corporations have incentives of disclosing more segmental information.…”