Voluntary disclosure of segment information : a study on Hong Kong diversified companies

Pao Yue-kong Library Electronic Theses Database

Voluntary disclosure of segment information : a study on Hong Kong diversified companies

 

Author: So, Charles
Title: Voluntary disclosure of segment information : a study on Hong Kong diversified companies
Degree: M.Sc.
Year: 2002
Subject: Hong Kong Polytechnic University -- Dissertations
Business enterprises -- China -- Hong Kong
Department: Multi-disciplinary Studies
Dept. of Accountancy
Pages: 45 leaves ; 30 cm
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b1615438
URI: http://theses.lib.polyu.edu.hk/handle/200/2751
Abstract: This paper investigates two research questions: First, the determinants of voluntary disclosure of segment information; Second, the consequences of voluntary disclosure of segment information. Maximising company's stock returns and attracting the attention of financial analysts and potential investors are the economic incentives for managers to voluntarily disclose private company information. On the other side, the costs of disclosing commercially valuable information to competitors may make managers reluctant to provide private company information. Voluntary disclosure choices of a sample of 90 diversified companies listed on the Stock Exchange of Hong Kong (SEHK) has been examined using a logistic regression model with industry concentration, stock returns, number of analysts providing earnings forecast and firm size as independent variables. The results show that industry concentration, stock returns and analysts' attention have negative correlation with managers' decision on voluntary disclosure of segment information while firm size has positive relation. Besides, the post-disclosure performance of the sample companies on stock returns and analysts' attention are also measured and compared so as to address my second research question on the consequences of voluntary disclosure of segment information. I recognise that companies providing voluntary disclosure of segment information are more likely to achieve higher stock returns (post-disclosure) and attract more financial analysts' attention (post-disclosure). This implies that managers may provide additional segment information in response to users' requests for information that improves earnings forecasts and firm valuation. Empirical research on voluntary disclosure of segment information is timely as accounting regulatory body in Hong Kong has recently issued the new accounting standard on segment reporting. It is interesting to know what the financial statement preparers have been done before segment information disclosure becomes mandatory and the rationale behind. By examining thee conomic factors affecting the voluntary disclosures and the consequences of voluntary disclosures, my research provide insight to understand the existing voluntary disclosure practice and suggest to consider the economic factors in formulating future accounting standard on financial information disclosures.

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