Quality and quantity of FTSE-100 segmental information reporting

Abstract

Purpose This study aims to explore the impact of international financial reporting standard no. 8 (IFRS 8) on segmental information reporting (SIR) after the post-implementation review (PIR) issued by international accounting standards board (IASB). This impact is examined in relation to quality and quantity as SIR dimensions represent, respectively, the level of reported items and segments. As a complement to this, the chief operating decision maker (CODM) identity is considered to understand the patterns of SIR dimensions. Design/methodology/approach The SIR of the UK financial times stock exchange 100 (FTSE-100) listed companies over the period 2013-2016 is the research’s scope. Several criteria were developed to ensure a representative research sample. A disclosure index approach was used facilitating the use of content analysis for data collection, which pertained to the dimensions of SIR published by the FTSE-100 following IFRS 8 PIR. Findings The IFRS 8 PIR has had several implications shaping the growing trend that is underpinned by the SIR dimensions published by FTSE-100 companies. First, the SIR quantity dimension positively corresponds over 2013-2016, but it still does not meet IASB’s demands. This, secondly, also applies to the quality dimension of SIR to uncover inconsistency with the existing knowledge being held regarding the introduction of IFRS 8. More specifically, the response of the FTSE-100 to mandatory and voluntary items seems to be in transition of substitution. Third, CODM’s identity was an insightful dimension in rationalising the understanding through the aforementioned dimensions. It is undertaken by boards of directors or executive committees and the case of the latter is associated with more disclose in relation to the CODM’s identity. Practical implications These findings reveal implications to: academics undertaking further research about IFRS 8 PIR to challenge or endorse this conclusion, using similar or alternative approaches; the stakeholders’ decision-making process; and policymakers to re-think the structure of mandatory and voluntary items. Originality/value This paper provides empirical evidence on the quality and quantity of SIR published by FTSE-100 companies following IFRS 8 PIR.

Enterprise resource planning enabling segmental information reporting practices of UK‐FTSE 100

“…The overall insight achieved through the use of Models (1) and (2) advances our understanding about how ERP enables the quality (M‐V) dimension of SIR. This supports earlier research, which reported an increasing trend in relation to both M‐SIR and V‐SIR in FTSE‐100 companies (Mardini and Ammar, 2019). This may be due to the best practices of cost allocation (Hyvönen, 2003) and budgeting (Jackling and Spraakman, 2006) that are offered by ERP.…”

“…This insight explains the link between internal (management accounting) and external (financial accounting) parties through SIR’s quantity dimensions (Cohen and Karatzimas, 2013). Specifically, it explains why the trend in relation to reported segments published by FTSE‐100 companies has generally increased in NoS (Mardini and Ammar, 2019). This may be ascribed to the value creation achieved through ERP’s characteristics, and this may explain: (i) the motivations of FTSE‐100 companies in pursuing ERP (Ugrin, 2009), and (ii) an increasing trend in the number of reported segments globally (Kang and Gray, 2013; Aleksanyan and Danbolt, 2015).…”

The impact of ERP utilisation experience and segmental reporting on corporate performance in the UK context

“…Further, they concluded that the adoption of IFRS-8 in a variety of different countries led to an increase in the number of reported segments. Moreover, the number of items provided per segment tended to increase under IFRS-8, especially post the implementation of the 2012 review (Mardini and Ammar 2019). On the other hand, some previous research (e.g., Mardini, Tahat, and Power 2018;Birt, Joshi, and Kend 2017;Kajüter and Nienhaus 2017) has investigated the value relevance of SR under IFRS-8.…”

“…These previous review studies drew attention to inconsistency and a knowledge gap in understanding the separate impacts of ERP and SR, on CP. It has recently been found that the content of both mandatory and voluntary SR were raised following IFRS operationalisation (Mardini and Ammar 2019). However, understanding the extent to which this operationalisation may influence CP is underdeveloped.…”

“…However, understanding the extent to which this operationalisation may influence CP is underdeveloped. Additionally, previous research (Mardini and Ammar 2019;Grabski, Leech, and Schmidt 2011) has outlined the lack of research exploring the CP-ERP and CP-SR associations in the context of the FTSE index, which is one of the most efficient worldwide markets.…”