Journal of Accounting and Economics Vol. 21 No. 2 1996
Corporate responses to segment disclosure requirements
Abstract
This paper shows through increasing disclosure requirements may induce firms to reduce their value-relevant disclosures. In the absence of segment reporting requirements, an incumbent firm may voluntarily disclose value-relevant information because it can use other, value-irrelevant, information to jam proprietary disclosures. However, when required to disclose segment data, the incumbent may aggregate proprietary information with other value-relevant information to deter entry by a rival. Hence, the firm does not disclose value-relevant information it would have revealed voluntarily in the absence of segment disclosure requirements. In such situations, requiring more disaggregate disclosures can actually decrease price efficiency.
- DOI
- 10.1016/0165-4101(95)00419-x
- Volume
- 21
- Issue
- 2
- Pages
- 253-275
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref