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Strategic revelation of differences in segment earnings growth


  • Wang, Qian
  • Ettredge, Michael
  • Huang, Ying
  • Sun, Lili


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.

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  • Wang, Qian & Ettredge, Michael & Huang, Ying & Sun, Lili, 2011. "Strategic revelation of differences in segment earnings growth," Journal of Accounting and Public Policy, Elsevier, vol. 30(4), pages 383-392, July.
  • Handle: RePEc:eee:jappol:v:30:y:2011:i:4:p:383-392

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    Cited by:

    1. Nunung Nuryani, 2017. "Value Relevance of Firms’ Reportable Segment Profit or Loss Reconciliation," GATR Journals afr140, Global Academy of Training and Research (GATR) Enterprise.
    2. André, Paul & Filip, Andrei & Moldovan, Rucsandra, 2016. "Segment Disclosure Quantity and Quality under IFRS 8: Determinants and the Effect on Financial Analysts' Earnings Forecast Errors," The International Journal of Accounting, Elsevier, vol. 51(4), pages 443-461.
    3. Martin Bugeja & Robert Czernkowski & Daryl Moran, 2015. "The Impact of the Management Approach on Segment Reporting," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 42(3-4), pages 310-366, April.

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