The relation between segment disclosure and earnings quality

Blanco, Belén; Lara, Juan Manuel Garcı́a; Tribó, Josep A.

doi:10.1016/j.jaccpubpol.2014.06.002

Cited by 23 publications

(23 citation statements)

References 65 publications

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“…This study uses two measures of earnings quality. First, which is also used by Francis, Nanda, & Olsson (2008) and Blanco, Lara, & Tribo (2014), are the accrual quality (ABSAQ), developed by Dechow & Dichev (2002) and modified by McNichols (2002). Here is a model of the accrual quality equation:…”

Section: Methodsmentioning

confidence: 99%

“…We did not take all the control variables in the Blanco, Lara, & Tribo (2014) because the availability of data in Indonesia adjusts it and also research findings of Indonesia companies. This study uses control variables as in equations (1), (2) and (3), namely: SIZE, is the size of the company measured from the natural logarithm of the total value of the company's assets; AGE, the age of the company, is from the age of listed companies on the exchange; LEV, leverage which is the concentration of debt in the firm's capital structure (Jalila & Devi, 2012).…”

Section: Methodsmentioning

confidence: 99%

“…The evidence indicates that segment disclosure is also an endogenous variable that is influenced by the quality of information. Wang et al (2011) and Blanco, Lara, & Tribo (2014) state that segment disclosure reduces information asymmetry and agency costs. On the other hand, earning quality also decreases information asymmetry and are considered to represent information asymmetry (Francis, Nanda, & Olsson, 2008;Blanco, Lara, & Tribo, 2014).…”

Section: Hypotheses Developmentmentioning

confidence: 99%

“…Wang et al (2011) and Blanco, Lara, & Tribo (2014) state that segment disclosure reduces information asymmetry and agency costs. On the other hand, earning quality also decreases information asymmetry and are considered to represent information asymmetry (Francis, Nanda, & Olsson, 2008;Blanco, Lara, & Tribo, 2014). Therefore, when the earnings quality is better, the company is not likely to hide the information and will reveal more details of company information.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

“…Although standards regulate segment disclosures, some researchers find that companies are still diverse in disclosing this segment's information. Blanco, Lara, & Tribo (2014) found that earning quality influence segment disclosure. That is, if the earning quality affects the level of disclosure segment, while both affect the decreasing in the cost of equity.…”

mentioning

confidence: 99%

See 4 more Smart Citations

Relationship of Earnings Quality and Segment Disclosure in Decreasing Cost of Equity

Khomsatun¹,

Siregar

Utama

2018

Jurnal Keuangan Dan Perbankan

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Investors would analyze the reporting of segments disclosure in the notes to the financial statements, addition to the main reporting that presents earnings and cash flows. We investigated the relationship between the segment disclosure level and the earning quality that could decrease the cost of equity. Sample of this research were 242 firms-years of manufacture industry firms. This research used simultaneous test; the first stage was a regression of segment disclosure level on earning quality and the second stage was a regression on the cost of equity. Segment disclosure level was measured from PSAK 5 Operating Segment (2009); the cost of equity measured using industry-adjusted E/P Ratio; earning quality measured using absolute of accrual quality and absolute of abnormal accrual. We found that earnings quality positively influences on segment disclosure level. We proved that there was a complementary effect between them. The second result showed that the segment disclosure level decreases the cost of equity, but marginally. The third result proved that in the second order condition, the segment disclosure level was stronger in decreasing the cost of equity. We proved that there was endogeneity of segment disclosure level in decreasing cost of equity.

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