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Segment reporting in a developing economy: the Indian banking sector

Author

Listed:
  • Jacqueline Birt
  • Mahesh Joshi
  • Michael Kend

Abstract

Purpose - The purpose of this paper is to investigate the value relevance of segment information for both public and private sector banks in India. In doing so, this paper examines a rapidly developing economy and perhaps its most critical sector during this period of strong economic growth. Design/methodology/approach - In this study uses the simplified Ohlson model, for a sample of 136 private sector and public sector banks for the period 2007-2010 in India. Findings - The paper finds that public sector banks have higher share prices, higher earnings and more equity compared with private sector banks. Segment earnings data is highly value relevant for both sectors; however, segment equity data is only marginally value relevant for Indian banks. The number of segments is also value relevant and associated with higher share prices. Originality/value - The results of this study contribute additional evidence to the literature on segment reporting by studying the effect of adoption of segment reporting in an emerging market. Findings from the paper are particularly relevant as India is currently in the process of changing its segment reporting requirements and moving to an IFRS-based segment standard.

Suggested Citation

  • Jacqueline Birt & Mahesh Joshi & Michael Kend, 2017. "Segment reporting in a developing economy: the Indian banking sector," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 25(1), pages 127-147, February.
    • Handle: RePEc:eme:arapps:ara-06-2015-0064
    DOI: 10.1108/ARA-06-2015-0064
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    More about this item

    Keywords

    Banking sector; Developing economies; International accounting standards; Segment reporting; M40; M41; M48;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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