The Accounting Review Vol. 50 No. 2 1975
The Effects on Investment Analysis of Alternative Reporting Procedure for Diversified Firms.
Abstract
This article presents the results of a field experiment conducted to determine the effects on investment analysis of the presence of segmental data in financial statements of diversified firms, as of April 1975. In theory the price of a share of common stock should represent the present value of its future income, which might be in the form of capital gains and/or dividends. A firm's expected income depends on its growth, profitability, and stability potentials. Since each industry has different potentials in these areas, analysts believe that they must know the extent to which a diversified firm is involved in each type of industry in order to evaluate intelligently a diversified firm's stock. Since there is theoretical support for including segmental data in reports of diversified firms, it appears that if the presence of such data in financial reports would result in a significantly different allocation of resources than that determined without segmental data, the U.S. Financial Accounting Standards Board must certainly conclude that diversified firms should include segmental data in their financial statements.
- DOI
- 10.2308/tar-4505953
- Volume
- 50
- Issue
- 2
- Pages
- 298-304
- Language
- en
- Sources
- openalex crossref