The Impact of IFRS 8 on Geographical Segment Information

Leung, Edith; Verriest, Arnt

doi:10.1111/jbfa.12103

Cited by 55 publications

(131 citation statements)

References 50 publications

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“…We also repeat the analysis in Tables 11 and 12 alternately on the following subgroups: single-segment change firms and single-segment nochange firms, single-segment change firms and multiple-segment no-change firms, multiple-segment change firms and multiple-segment no-change firms, single and 31 Berger and Hann (2003) include the stock return volatility measured over the prior 36 months as an additional control variable in their model. Leung and Verriest (2015) reach a similar conclusion for their analysis of the change in geographic segment information after the adoption of IFRS 8. 32 For both standard changes, firms with analyst following are significantly larger and more profitable than those firms without analyst following.…”

Section: (Iv) Impact On Analyst Forecastssupporting

confidence: 68%

“…Unlike US evidence for SFAS 131 (Berger and Hann, 2003;and Botosan and Stanford, 2005), but similar to the findings in Leung and Verriest (2015), we find no significant change in analyst forecast accuracy or dispersion following the adoption of either standard. Unlike US evidence for SFAS 131 (Berger and Hann, 2003;and Botosan and Stanford, 2005), but similar to the findings in Leung and Verriest (2015), we find no significant change in analyst forecast accuracy or dispersion following the adoption of either standard.…”

Section: Introductionsupporting

confidence: 73%

“…In a concurrent study, Leung and Verriest (2015) find a lack of evidence that analyst forecast accuracy or dispersion improved for firms that provided better geographic segment information post-IFRS 8. In a concurrent study, Leung and Verriest (2015) find a lack of evidence that analyst forecast accuracy or dispersion improved for firms that provided better geographic segment information post-IFRS 8.…”

Section: (Iv) Impact Of Segment Disclosures On the Information Enviromentioning

confidence: 95%

“…A number of studies have examined the impact of this change on the quantity of line item disclosures. Leung and Verriest (2015) study geographical segment disclosures after IFRS 8 and document the reporting of less geographical segment information. Nichols et al (2012) using a sample of European firms also find that IFRS 8 led to a reduction in the disclosure of line items, with the greatest decrease taking place for liabilities and capital expenditure.…”

Section: (Iii) Influence Of the Management Approach On The Quantity Omentioning

confidence: 99%

“…Finally, we add to the growing body of literature examining the consequences of the adoption of IFRS 8 (Blanco et al, 2015;and Leung and Verriest, 2015). Firstly, prior research examining the effects of the adoption of IAS 14R and IFRS 8 is typically based on a small sample of large listed firms and does not examine the motivations behind the prior nondisclosure of segments.…”

Section: Introductionmentioning

confidence: 99%

See 4 more Smart Citations

The Impact of the Management Approach on Segment Reporting

Bugeja¹,

Czernkowski²,

Moran

2015

Business Fin & Account

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Accounting standard setters have increasingly attempted to align external segment reporting disclosures to a firm's internal reporting structure. We study how this move to the management approach for segment reporting impacted the number of reported segments and the extent of line item disclosures when Australia adopted IAS 14 (revised) and IFRS 8. We find that both standards led to firms disclosing a greater number of segments. An examination of the motives behind the non‐disclosure of segments suggests that segment information was withheld for agency cost reasons. We find only limited support for the proprietary cost motive for non‐reporting of segments. We also document that IFRS 8 led to a reduction in the amount of line item disclosure. Consistent with a proprietary cost explanation, the decrease in disclosure is greatest for firms with a higher number of profitable segments. Our results indicate that the change to the management approach to segment identification is not associated with the properties of analyst forecasts, nor did it lead to increased analyst following.

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Section: (Iv) Impact On Analyst Forecastssupporting

confidence: 68%

Section: Introductionsupporting

confidence: 73%

Section: (Iv) Impact Of Segment Disclosures On the Information Enviromentioning

confidence: 95%

Section: (Iii) Influence Of the Management Approach On The Quantity Omentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

The Impact of the Management Approach on Segment Reporting

Bugeja¹,

Czernkowski²,

Moran

2015

Business Fin & Account

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IFRS 8 and the cost of capital in Europe

2022

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This study examines segment reporting information usefulness after the adoption of IFRS 8 in 18 European Union countries. Specifically, 1) we introduce a new comprehensive measure of segment reporting quality that reflects four different dimensions of segment information, 2) we investigate the impact of segment reporting quality on the cost of equity and debt capital after the adoption of IFRS 8, and 3) we investigate the moderating role of the country-level enforcement system on the association between segment reporting quality and the cost of equity and debt capital after the adoption of IFRS 8. Using a selfconstructed segment reporting quality measure and a sample of 884 firm-year observations over the period of 2007 to 2011, we provide evidence that investors and lending institutions find no change in the usefulness of segment reporting after the adoption of IFRS 8. Our study is original in using a comprehensive measure of segment reporting quality. Furthermore, our study is the first to examine the relationship between segment reporting quality and the cost of debt capital after the adoption of IFRS 8 and the moderating role of the country-level enforcement system. Our findings provide useful insights to regulator and accounting standard-setting bodies about segment reporting.

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The Use of Segment Information by Financial Analysts and Forecast Accuracy: A Study on European Intermediate‐Size Companies

Demerens

Delvaille

Manh

et al. 2016

Thunderbird Intl Bus Rev

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This research investigates the usefulness for financial analysts of segment information disclosed by European intermediate‐size companies reporting under IFRS. While most studies on segment information usefulness focus on the consensus aggregated from financial analysts’ forecasts for blue‐chip companies, our study contributes to the literature by investigating the recommendation reports of financial analysts covering European intermediate‐size companies. The study is based on an original, hand‐collected database obtained from a sample of 339 analysts’ recommendation reports for 146 firms. Our research reveals that though a majority of analysts refer to segment information in their reports, only a few of them use it in their valuation models. Moreover, it also demonstrates that the use of segment information by financial analysts is higher for larger firms than for smaller ones and is not associated with greater forecast accuracy. Hence, our results question the usefulness of segment information disclosures for small firms. © 2016 Wiley Periodicals, Inc.

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The Impact of IFRS 8 on Geographical Segment Information

Cited by 55 publications

References 50 publications

The Impact of the Management Approach on Segment Reporting

The Impact of the Management Approach on Segment Reporting

IFRS 8 and the cost of capital in Europe

The Use of Segment Information by Financial Analysts and Forecast Accuracy: A Study on European Intermediate‐Size Companies

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