Strategic revelation of differences in segment earnings growth
Ying Huang and
Journal of Accounting and Public Policy, 2011, vol. 30, issue 4, 383-392
Prior studies have theoretically and empirically documented that incentives to disclose information involve a trade-off between the benefits to the corporation of reducing information asymmetry and the costs of revealing proprietary information. This study investigates the interplay of managers' motives to conceal versus reveal cross-segment differences in earnings growth in multi-segment firms. We find that revealed segment earnings growth differences are negatively associated with proxies for proprietary costs and agency costs, and positively associated with firms' reliance on external financing. We also find that SFAS No. 131 improved the quality of segment information by requiring or allowing revelation of greater cross-segment differences in earnings growth.
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jappol:v:30:y:2011:i:4:p:383-392
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