Information content of mandatory quarterly foreign sales data of U.S. multinational companies under SFAS 131

The extent of segmental reporting and its value relevance: cross-country evidence

“…For instance, Chen and Zhang (2003) found that the value relevance of segmental details about profit and growth increased under this management approach. Hossain and Marks (2005) reported that information about inter-segment sales was more value relevant under this management approach. Moreover, they discovered that the shareholders considered external sales when making their equity valuation decisions.…”

Change in value relevance of quarterly foreign sales data of U.S. multinational corporations after adopting SFAS 131

“…5 Holthausen and Watts (2001) recommend applying short-window event study methodology for value relevance studies. Hossain and Marks (2005) in a similar study use short-window event study methodology. 6 The economic benefits of mandating accounting disclosures are subject to considerable debate in the financial accounting literature.…”

“…I use hand-collected foreign sales data as a proxy for foreign operational performance. I focus on the foreign sales data rather than foreign earnings data because most multinational firms disclose quarterly foreign sales data and not foreign earnings data (Hossain and Marks 2005). Furthermore, Christophe and Pfeiffer Jr. (2002) test the valuation consequence of foreign sales instead of foreign earnings because firms are allowed wide discretion in calculating foreign earnings.…”

“…Most recently, Hope et al (2007) find that annual foreign earnings are valued at a relatively higher rate after adopting SFAS 131 by applying a long-window association study methodology. Hossain and Marks (2005) test the information content of quarterly foreign sales data of previously disclosing firms-firms disclosing quarterly foreign sales data before the adoption of SFAS 131-and nondisclosing firms-firms not disclosing quarterly foreign sales data before the adoption of SFAS 131-in the post-adoption regime of SFAS 131. The empirical findings of their study indicate that quarterly foreign sales data disclosed under SFAS 131 for both disclosing and nondisclosing firms have valuation implications in the post-adoption period of SFAS 131.…”

“…The empirical findings of their study indicate that quarterly foreign sales data disclosed under SFAS 131 for both disclosing and nondisclosing firms have valuation implications in the post-adoption period of SFAS 131. While Hossain and Marks (2005) look at the value relevance of quarterly foreign sales data only in the post-adoption period of SFAS 131, no research to date examines whether the value relevance of quarterly foreign sales data varies across preadoption and post-adoption regimes of SFAS 131.…”