Strategic Revelation of Differences in Segment Earnings Growth

23 Pages Posted: 14 Jan 2008 Last revised: 25 Jan 2018

See all articles by Qian Wang

Qian Wang

Iowa State University - College of Business

Michael Ettredge

University of Kansas - Accounting and Information Systems Area

Ying (Julie) Huang

University of Louisville

Lili Sun

University of North Texas - Department of Accounting

Multiple version iconThere are 2 versions of this paper

Date Written: May 18, 2011

Abstract

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.

Keywords: Segment disclosure, proprietary costs, agency costs, SFAS No. 131, earnings growth, revenue growth, external financing

JEL Classification: M41, D21, D78

Suggested Citation

Wang, Qian and Ettredge, Michael L. and Huang, Ying and Sun, Lili, Strategic Revelation of Differences in Segment Earnings Growth (May 18, 2011). Journal of Accounting and Public Policy, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1081708 or http://dx.doi.org/10.2139/ssrn.1081708

Qian Wang (Contact Author)

Iowa State University - College of Business ( email )

Ames, IA 50011-2063
United States

Michael L. Ettredge

University of Kansas - Accounting and Information Systems Area ( email )

1300 Sunnyside Avenue
Lawrence, KS 66045
United States
785-864-7537 (Phone)
785-864-5328 (Fax)

Ying Huang

University of Louisville ( email )

School of Accountancy
College of Business
Louisville, KY KY Kentucky 40292
United States
5028521647 (Phone)
5028521647 (Fax)

HOME PAGE: http://www.linkedin.com/in/ying-julie-huang-02093769

Lili Sun

University of North Texas - Department of Accounting ( email )

1155 Union Circle #305219
Denton, TX 76203-5017
United States
940-565-3077 (Phone)

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