The influence of disclosure policy on analyst behavior: The case of segment data

Schaberl, Philipp D.

doi:10.1016/j.adiac.2014.09.010

Cited by 2 publications

(1 citation statement)

References 47 publications

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“…Consistent with the idea that the adoption of new accounting standards can have an impact on information processing, Elliott and Philbrick (1990) find that analyst forecast errors and forecast dispersion are larger in years of an accounting change than in non-change years. To mitigate the impact of any adoption year effects, we follow Kohlbeck and Warfield (2010) and Schaberl (2014) and exclude the years surrounding the implementation of SFAS 131, that is, 1997SFAS 131, that is, , 1998SFAS 131, that is, , and 1999 20. One possible explanation for these results is that the risk exposure of the firms included in the sample could have changed between the pre and post periods.…”

Section: Discussionmentioning

confidence: 99%

Cutting Through Complexity: Segment Disclosure and Pricing Efficiency

Chichernea

Schaberl

Thevenot

2022

Journal of Accounting, Auditing & Finance

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In 1997, Statement of Financial Reporting Standards (SFAS) 131 introduced a substantial change in how segment information is reported in US-GAAP (Generally Accepted Accounting Principles) financial statements. We seek to examine whether this change in financial reporting policy increases investors’ ability to process information relevant to conglomerate firms (i.e., those operating in multiple industries) more quickly, and whether this increased efficiency in information processing varies cross-sectionally based on firm complexity and the direction of industry news. Our results indicate that SFAS 131 has increased the speed with which stock prices capture information about conglomerates, relative to focused firms, although we find that some frictions remain with regard to disclosing bad news. This study documents an example of how a change in disclosure policy can enhance pricing efficiency, and hence, it may be of interest to the Financial Accounting Standards Board (FASB) in its ongoing initiative to consider potential changes to SFAS 131.

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Section: Discussionmentioning

confidence: 99%

Cutting Through Complexity: Segment Disclosure and Pricing Efficiency

Chichernea

Schaberl

Thevenot

2022

Journal of Accounting, Auditing & Finance

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Does the interaction between the accounting method choice and disclosure affect financial analysts’ information environment? The case of joint ventures under IAS 31

Inchausti

Sánchez

Fuentes

2017

Spanish Journal of Finance and Accounting / Revista Española de

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IAS 31 allowed firms to choose between proportionate consolidation and the equity method to record joint ventures in the consolidated accounts of the venturer. Moreover, this election implied a decision about including information in the primary financial statements or in the notes. This paper investigates if financial analysts perceive accounting information differently depending on the method chosen conditioned to the disclosure of the required information in the notes. We analyze a sample of Spanish firms during 2005-2010. We not only consider earnings forecasts, but also examine target prices and stock recommendations. Furthermore, following Barron et al. (1998) we look at how this accounting choice affects analysts' information environment. Our results suggest that the choice of accounting regime does not affect the bias and accuracy of earnings forecasts, nor target prices nor stock recommendations, no matter if firms provide or not information in the notes. While the proportionate method implies lower dispersion in analysts' forecasts than the equity method, our tests do not allow us to confirm that the information environment depends on the accounting method. These results support the decision adopted in IFRS 11 to impose a unique method for the accounting of joint ventures.

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The influence of disclosure policy on analyst behavior: The case of segment data

Cited by 2 publications

References 47 publications

Cutting Through Complexity: Segment Disclosure and Pricing Efficiency

Cutting Through Complexity: Segment Disclosure and Pricing Efficiency

Does the interaction between the accounting method choice and disclosure affect financial analysts’ information environment? The case of joint ventures under IAS 31

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