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The usefulness of Non-IFRS segment data

Max Göttsche, Stephan Küster and Tobias Steindl

Journal of International Accounting, Auditing and Taxation, 2021, vol. 43, issue C

Abstract: A controversial aspect of International Financial Reporting Standard (IFRS) 8 allows firms to define their segment profit (or loss) on a different basis than IFRS measurement and recognition principles, but whether these non-IFRS segment data are useful is in large part unexplored. We fill this gap by investigating the usefulness of non-IFRS segment data from the perspective of financial analysts. Using hand-collected segment data on a sample of European multi-segment firms, we find empirical evidence that non-IFRS segment data lead to less accurate analyst forecasts. Additionally, we find that non-IFRS segment data are associated with higher forecast dispersion, higher uncertainty in analysts’ forecasts, and a lower precision of analysts’ public information set. Collectively, our findings suggest that non-IFRS segment data impair analysts’ information environment, which casts doubt on their usefulness.

Keywords: IFRS 8; Management approach; Segment reporting; Non-IFRS segment data; Analysts; Forecast accuracy (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jiaata:v:43:y:2021:i:c:s1061951821000070

DOI: 10.1016/j.intaccaudtax.2021.100382

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