The incremental informativeness of public subsidiary earnings

Abbie Daly

International Journal of Accounting & Information Management, 2018, vol. 26, issue 2, 272-290

Abstract: Purpose - This study aims to investigate how holding public subsidiaries affects the information environment of consolidated entities in Germany. Design/methodology/approach - The sample consists of German consolidated entities that are traded on major German stock exchanges over the fiscal years 2005-2012 and hold subsidiaries with public common equity. The informativeness of earnings, defined as the association between earnings and returns, is used to investigate how holding public subsidiaries affects the information environment of consolidated entities. Findings - Findings suggest that public subsidiary earnings are incrementally informative about consolidated entity returns beyond both consolidated and segment earnings reported by consolidated entities in Germany. An investigation into the factors that affect the incremental informativeness of public subsidiary earnings reveals that public subsidiary earnings are more incrementally informative when, compared to the consolidated entity, they are relatively large, have dissimilar growth prospects and are from the same country (i.e. Germany). Practical implications - These findings suggest that this disclosure is useful to investors and that this type of disclosure could be valuable to adopt in other countries that do not have this disclosure requirement. Originality/value - These findings contribute to the streams of literature that: investigate ways that regulators can improve the information environment of corporations, compare the informativeness of accounting measures and investigate the informativeness of subsidiary information.

Keywords: Germany; Stock returns; Consolidation; Public subsidiaries; Subsidiary earnings (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:ijaimp:ijaim-01-2017-0007

DOI: 10.1108/IJAIM-01-2017-0007

Access Statistics for this article

International Journal of Accounting & Information Management is currently edited by Dr Xin (Robert) Luo and Professor Han Donker

More articles in International Journal of Accounting & Information Management from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().