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Does location matter for disclosure? Evidence from geographic segments

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  • Edith Leung
  • Arnt Verriest

Abstract

The segment disclosures of multinational companies provide strategic information. We use the location characteristics of geographic segments to identify the reasons for withholding or disclosing segments. We examine segment data from around the adoption of IFRS 8, a reporting standard that requires firms to reveal more disaggregated information. Consistent with a proprietary cost motive for nondisclosure, we find that segments in regions that are deemed better for business tend to be hidden, while higher entry barriers for a segment are positively related to disclosure. These effects appear to be stronger for firms for which proprietary cost motives are more important. Among the previously unrevealed segments, proprietary costs explain the nondisclosure of segment earnings and other relevant financial information for investors.

Suggested Citation

  • Edith Leung & Arnt Verriest, 2019. "Does location matter for disclosure? Evidence from geographic segments," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 46(5-6), pages 541-568, May.
    • Handle: RePEc:bla:jbfnac:v:46:y:2019:i:5-6:p:541-568
    DOI: 10.1111/jbfa.12375
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    Cited by:

    1. Janet Cereola, Sandra & Dynowska, Joanna, 2022. "The impact of IFRS-8, segment reporting, on the disclosure practices of Polish listed companies," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 47(C).
    2. Ranganathan, Kavitha & Veeraraghavan, Madhu, 2023. "Pre-and-aftermarket IPO underpricing: Does use of proceeds disclosure matter?," Journal of Contemporary Accounting and Economics, Elsevier, vol. 19(3).
    3. Müller, Raphael & Spengel, Christoph & Weck, Stefan, 2021. "How do investors value the publication of tax information? Evidence from the European public country-by-country reporting," ZEW Discussion Papers 21-077, ZEW - Leibniz Centre for European Economic Research.
    4. Sameh Ammar & Ghassan H. Mardini, 2021. "Enterprise resource planning enabling segmental information reporting practices of UK‐FTSE 100," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(1), pages 1205-1237, March.
    5. Gundert, Hannah & Spengel, Christoph & Weck, Stefan, 2024. "Leveling the playing field? A qualitative and quantitative examination of the EU directive on public country-by-country reporting," ZEW Discussion Papers 24-019, ZEW - Leibniz Centre for European Economic Research.
    6. Taran, Alina & Simga-Mugan, Can & Mironiuc, Marilena, 2021. "Country-segment disclosure of foreign operations from Central and Eastern Europe: Country-level determinants and value relevance," Journal of Multinational Financial Management, Elsevier, vol. 62(C).

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