Implications of proposed segment reporting standards for financial analysts' investment judgments

Article Abstract:

The congruence between externally and internally reported segment definitions affects the qualitative judgments and decisions of investment analysts. This was the main finding of an experiment wherein 56 financial analysts were given financial data for a company which reported information for three divisions as two segments in its annual report. The effect of two alternative approaches to segment definition was examined, namely, definition by internal reporting classification and definition by grouping similar products. As expected by the Financial Accounting Standards Board, segment data are perceived as more reliable by analysts when external and internal segments were congruent than when they were incongruent. Analysts also perceived segment reporting as more reliable when similar products were combined in a segment, compared to the combination of dissimilar products.

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An investigation of Securities and Exchange Commission regulation of auditor change disclosures: the case of Accounting Series Release No. 165

Article Abstract:

The SEC claimed when it imposed its Accounting Series Release (ASR) Number 165 in Jan 1975 that prior form 8-K filings may have been tied to company-delayed disclosure of financial 'bad' news. Evidence is offered here of the utility of the increased timeliness of data about auditor changes stemming from this regulation. Results suggest that the more timely filing of 8-K forms does bring out information which both the SEC and investors would characterize as bad news. Companies which delayed in engaging the services of new auditors prior to imposition of ASR number 165 do not typically self-select to put off hiring new auditors today. The SEC's claim about the usefulness of more timely release of financial news are supported by the research presented here.

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Motivations for a change in disclosure frequency and its consequences: an examination of voluntary quarterly segment disclosures

Article Abstract:

Issues concerning the economic factors involved in management decisions regarding the frequency of segment disclosures are examined. Topics include effect of disclosure on liquidity, information asymmetry, and how frequency of disclosure relates to practices of other businesses in the same industry.

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