Does IFRS 8 improve the firms' information environment?

Gaëlle Lenormand () and Lionel Touchais ()
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Gaëlle Lenormand: UR - Université de Rennes, CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique
Lionel Touchais: UR - Université de Rennes, CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique

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Abstract: Purpose: This article analyzes the effect of International Financial Reporting Standard (IFRS) 8 on the informational content of segment data. It aims to assess the change in quality of the financial analysts' and the shareholders' information environment due to the new segment reporting standard to verify the International Accounting Standards Board's (IASB) expectations and the conclusions of its post-implementation review. Design / methodology / approach: Based on a sample of 250 companies listed on Euronext Paris in France, a country with poor legal protection for shareholders, over a nine-year period, the authors test whether the new standard makes the financial analysts' forecasts more accurate and reduces the implied cost of equity capital. Findings: The findings show that IFRS 8 partially improves the informational content of segment data, partially supporting the outcome of IASB. The management approach may have forced some firms to change their segmentation to provide a more economic view of the business. The poor legal protection for shareholders in France may explain this result. Research limitations / implications: Due to proprietary and agency costs, firms may withhold segment information whatever the standard used. Practical implications: This study contributes to the ongoing debate about IFRS 8 and may interest financial statement users and the international standard-setter for such a criticized standard. Originality / value: The results contribute to the segment reporting literature by addressing the partial improvement of information environment under the managerial approach in a country with lower investor protection.

Keywords: IFRS 8; segment reporting; information environment; financial analysts' forecasts; cost of equity capital Paper type -Research paper (search for similar items in EconPapers)
Date: 2021-01-15
New Economics Papers: this item is included in nep-acc
Note: View the original document on HAL open archive server: https://hal.science/hal-03123906
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Published in Journal of applied accounting research, 2021, 22 (2), pp.383-400. ⟨10.1108/JAAR-05-2020-0088⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-03123906

DOI: 10.1108/JAAR-05-2020-0088

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