Download or read book Proprietary Costs and Determinants of Voluntary Segment Disclosure written by Annalisa Prencipe and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper aims to identify new determinants of the extent of voluntary segment disclosure by using the theoretical framework of the Proprietary Costs Theory, which states that companies limit voluntary disclosure because of proprietary costs, such as preparation and competitive costs. On the basis of the existing literature on this theory and on segment reporting, three hypotheses are theoretically derived, each correlating the level of segment disclosure to a new determinant, specifically the correspondence between the segments and legally identifiable subgroups of companies, the growth rate and the listing status age. The paper also provides further evidence to test the impact of some "traditional" determinants, introduced in the study as control variables. The hypotheses formulated are empirically verified. The analysis is carried out with reference to Italy, because of its limited legal and professional provisions on the topic. For the empirical test, a sample of 64 Italian listed companies is selected and a multiple regression model is used. Results show that, except for the growth rate, the two other new determinants are significantly related to the extent of segment disclosure. These findings confirm that proprietary costs are particularly relevant and limit the incentive for companies to provide segment information to the market.

Download or read book Proprietary Costs and Voluntary Segment Disclosure written by Annalisa Prencipe and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper aims to identify some new determinants of the quality of voluntary segment disclosure by using the theoretical framework of Proprietary Costs Theory. The identified new determinants are correspondence between segments and legally identifiable subgroups of companies, level of detail in segment definition, listing status age and growth rate. The paper also provides further evidence to test the impact of some traditional determinants, which are introduced in the model as control variables. The study is carried out in Italy, which proves to be a particularly suitable setting for the analysis because of its limited legal and professional requirements on the topic. To test the hypotheses, a sample of 67 Italian listed companies was selected and a multiple regression model was used. Except for growth rate, all the other new determinants proved to be significantly related to segment reporting quality, consistently to what hypothesized. These results confirm that proprietary costs are particularly relevant for segment reporting, thus limiting the incentive for the companies to provide this information to the market.

Download or read book An Analysis of the Proprietary Costs of Segment Disclosure written by Cristi Anne Gleason and published by . This book was released on 1998 with total page 94 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the proprietary costs of line-of-business (LOB) reporting. Despite research documenting many benefits of LOB reporting, no research has directly examined the proprietary costs resulting from mandatory segment reporting. My empirical examination of proprietary costs supports the theoretical expectation that the expected proprietary costs of LOB reporting exceeded expected related benefits for manufacturing firms that reported segment information only when required to do so by the SEC. Firms that elected not to report segment information voluntarily had higher levels of market power. Hence these firms faced greater expected costs from competitor entry, pressure from labor groups, suppliers and customers, and government regulation. These firms also obtained less additional financing in the years prior to the SEC requirement, consistent with lower expected benefits. However, my results do not provide any evidence that these involuntary reporters subsequently incurred the expected proprietary costs. In contrast, my results show that voluntary reporters were more likely to obtain financing during the voluntary reporting period, suggesting that differing benefits rather than proprietary costs distinguish voluntary and mandated reporters. This result is consistent with the position of the FASB and with statements made by other supporters of segment reporting, dismissing concerns over substantial competitive harm.

Download or read book Quality of Segment Reporting written by Fatin Nur Syafiqa Anuar and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Proprietary Costs Governance on the Segment Disclosure Decision written by Ana Gisbert and published by . This book was released on 2014 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: Focusing on the Spanish setting, traditionally characterized by high ownership concentration and a regulatory framework which has traditionally given more priority to the avoidance of proprietary and competition costs related to segment disclosures than promoting transparency, this paper aims to identify the main factors influencing the segment reporting decision. In particular, we aim to test whether the strength of the concentrated ownership structures together with the remaining pre-IAS reporting philosophy offsets the role of independent directors. If this is the case, it would be in spite of the new IAS/IFRS reporting standards based on relevance and transparency, and would also run counter to the improvements in the Spanish governance framework which strengthens the presence of independent non-executive directors. The empirical evidence suggests that under the new IAS/IFRS reporting philosophy, proprietary costs may have lost relevance due to the introduction of mandatory segment information requirements. In addition, within an institutional context of high ownership concentration independent directors play a significant role in raising the level of reported information. The context of the new IFRS 8 offers new opportunities to observe how governance and proprietary costs affect the new “management approach” for segment reporting classification.

Download or read book Segment Disclosures Proprietary Costs and the Market for Corporate Control written by Philip G. Berger and published by . This book was released on 2003 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent studies provide evidence that the new segment reporting rule, SFAS 131, induced companies to provide more disaggregated segment information. We use adoption of the new standard to identify firms that aggregated segment information under the old standard, SFAS 14, and examine two motives for managers to aggregate segment information. First, withholding proprietary information and, second, avoiding external scrutiny from the market for corporate control. We find firms that increased their segment disclosure on adoption of SFAS 131 (i.e., firms that aggregated segment data under SFAS 14) had higher abnormal profitability and operations with more divergent performance. We do not, however, find a significant decline in abnormal profits for these firms after SFAS 131, suggesting their concerns that more disaggregated reporting would result in competitive harm were unwarranted. We also document a negative association between aggregating segment information and the probability of takeover activities in the pre-SFAS 131 period. Firms that are forced to provide more disaggregated information under the new standard face a higher takeover likelihood in the post-SFAS 131 period. These results suggest that the more disaggregated disclosure generated by the new standard facilitates the market for corporate control.

Download or read book Proprietary Costs and Disclosure Substitution written by Mirko Stanislav Heinle and published by . This book was released on 2020 with total page 72 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study develops and tests a simple model of voluntary disclosure where managers can choose to withhold (i.e., redact) information from mandatory disclosure. We consider a setting where mandatory disclosure is a disaggregated disclosure (e.g., a financial statement), voluntary disclosure is an aggregate disclosure (e.g., an earnings forecast), and the costs of each type of disclosure are distinct. In this setting, we show that concerns about the proprietary cost of mandatory disclosure motivate managers to withhold information from mandatory disclosure and substitute voluntary disclosure. We test our predictions using a comprehensive sample of mandatory disclosures where the SEC allows the firm to redact information that would otherwise jeopardize its competitive position. Consistent with our predictions, we find strong evidence that redacted mandatory disclosure is associated with greater voluntary disclosure.

Download or read book The Expected Costs of Increased Disclosure Firm and Industry specific Forces written by Simon Kröger and published by GRIN Verlag. This book was released on 2020-08-05 with total page 26 pages. Available in PDF, EPUB and Kindle. Book excerpt: Seminar paper from the year 2020 in the subject Business economics - Accounting and Taxes, grade: 1.0, Mannheim University of Applied Sciences, language: English, abstract: A series of financial crises and corporate scandals gave rise to increasing concerns about prevailing models of corporate governance and disclosure and stimulated financial disclosure and reporting regulation. As a result, there has been considerably more interest in documenting the benefits of increased disclosure than its costs. Accordingly, numerous papers purport to provide evidence of capital market benefits through incremental disclosure. At the same time, firms refrain from voluntarily committing to increased disclosure, implying that there must be a trade-off between associated benefits and costs. Consequently, critics contend that the capital market benefits are inconclusive. Instead, increased disclosure may result in adverse capital market effects through increasing information asymmetry. Moreover, critics predict that increased disclosure imposes further costs on the firm. The purpose of this seminar thesis is to review existing literature on these expected costs of increased disclosure. Thereby, I focus on controversies regarding the heavily debated capital market effects as well as on specific forces that determine proprietary and litigation costs associated with increased disclosure. While a firm’s disclosure choices likely are a joint outcome of market forces and incentives provided by regulation, the seminar thesis is limited to voluntary disclosure choices as a starting point for possible disclosure regulation. The remainder of the seminar thesis is structured as follows. Section 2 reviews the literature on the capital market effects of voluntary disclosure through its impact on information asymmetry. Section 3 discusses the ambiguous impact of voluntary disclosure on litigation and proprietary costs. Section 4 concludes the seminar thesis.

Download or read book Proprietary Versus Non Proprietary Disclosures written by Christian Leuz and published by . This book was released on 2004 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: Discretionary disclosure theory suggests that proprietary costs are an important reason why firms often withhold material information. However, empirically testing this hypothesis has proven to be difficult, due especially to the elusive nature of proprietary costs and lack of settings in which proprietary disclosures are voluntary. This paper exploits the fact that that until recently, German firms were not required to disclose business segment reports, which are generally viewed as competitively sensitive and proprietary in nature. Analyzing firms' voluntary business segment disclosures, I find evidence consistent with the proprietary cost hypothesis. As Germany now requires segment reporting by all listed firms, I also examine ex post whether segment reporting is more revealing for those firms that previously chose not to disclose. I find that firms are less likely to voluntarily provide segment reports if segment profitability is more heterogeneous and the average profitability reported in the income statement is less revealing. This finding is also consistent with the proprietary cost hypothesis and shows that segment disclosures are not governed by capital-market considerations alone. I benchmark my findings using voluntary cash flow statement disclosures. In comparison to segment reports, which likely reveal proprietary information to competitors, cash flow statements are less competitively sensitive. I find that cash flow disclosures appear to be governed primarily by capital-market considerations. This finding lends further support to the proprietary cost interpretation of the segment reporting results.

Download or read book Ownership Competition and Financial Disclosure written by Chris Bilson and published by . This book was released on 2009 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: A firm's incentive to disclose has been linked empirically to a range of variables including information asymmetry, agency costs, political costs, and proprietary costs. While the intuition underlying each of the variables seems plausible, Verrecchia (2001) argues that disclosure models can be characterized as an eclectic mingling of highly idiosyncratic economic-based models and challenges researchers to take the first steps to unification. First, we investigate the role of ownership and competition variables in explaining voluntary segment disclosures in Australian firms and find support for both these variables. Second, drawing on theory supported by the corporate governance, strategic management and industrial organization literatures we introduce a new economic variable that unifies both ownership and competition variables. We find that the unifying variable performs better than our model focusing on ownership and competition variables alone. We conduct a series of robustness tests on the model and find that its significance is not affected by the inclusion of disclosure control variables identified in prior literature, the change in standard, and acquisitions and disposals of physical assets.

Download or read book Voluntary Annual Report Disclosure by Listed Dutch Companies 1945 1983 written by Kees Camfferman and published by Routledge. This book was released on 2020-09-04 with total page 313 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book, first published in 1997, analyses the development of Dutch financial reporting. A process of change in international financial reporting began in the early 1960s, and this book examines the roles of voluntary and legislated improvements on financial information disclosure.

Download or read book Dynamic Voluntary Disclosure with Endogenous Proprietary Costs written by Jeremy Bertomeu and published by . This book was released on 2020 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper explores corporate disclosure in a dynamic oligopoly setting. In each period, a firm receives a signal on market size and must decide whether or not to publicly disclose the information before engaging in price competition in the product market. The main insight here is that firms' disclosure choices can be used strategically to sustain higher, collusive pricing choices on the product market. Specifically, two main forces in play are (1) no-disclosure makes it easier for the oligopoly to sustain higher prices because the uninformed firms are uncertain about the market size (and therefore the benefit of deviating from collusion is lower than otherwise); and (2) disclosure makes it easier to coordinate prices if and when the oligopoly wishes to condition equilibrium prices on the market size. We find that, when firms are sufficiently patient such that monopoly prices can be sustained as an equilibrium, no-disclosure is (weakly) preferable to any other disclosure policy. Otherwise and in contrast to the static model, a simple form of partial disclosure can be optimal: the informed firm does not disclose when market size is either too high or too low but discloses for intermediate market sizes.

Download or read book Voluntary Disclosure when Private Information and Disclosure Costs are Jointly Determined written by Jung Min Kim and published by . This book was released on 2020 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: Classical models of voluntary disclosure feature two economic forces: the existence of an adverse selection problem (e.g., a manager possesses some private information) and the cost of ameliorating the problem (e.g., costs associated with disclosure). Traditionally these forces are modelled independently. In this paper, we use a simple model to motivate empirical predictions in a setting where these forces are jointly determined--where greater adverse selection entails greater costs of disclosure. We show that joint determination of these forces generates a pronounced non-linearity in the probability of voluntary disclosure. We find that this non-linearity is empirically descriptive of multiple measures of voluntary disclosure in two distinct empirical settings that are commonly thought to feature both private information and proprietary costs: capital investments and sales to major customers.

Download or read book Does Location Matter for Disclosure Evidence from Geographical Segments written by Edith Leung and published by . This book was released on 2019 with total page 45 pages. Available in PDF, EPUB and Kindle. Book excerpt: The segment disclosures of multinational companies provide strategic information. We use the location characteristics of geographic segments to identify the reasons for withholding or disclosing segments. We examine segment data from around the adoption of IFRS 8, a reporting standard that requires firms to reveal more disaggregated information. Consistent with a proprietary cost motive for nondisclosure, we find that segments in regions that are deemed better for business tend to be hidden, while higher entry barriers for a segment are positively related to disclosure. These effects appear to be stronger for firms for which proprietary cost motives are more important. Among the previously unrevealed segments, proprietary costs explain the nondisclosure of segment earnings and other relevant financial information for investors.

Download or read book The Effects of Voluntary Disclosure Level Ownership Structure and Proprietary Cost on the Return earnings Relation written by Shuqing Luo and published by . This book was released on 2003 with total page 132 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Economics and Politics of Accounting written by Christian Leuz and published by OUP Oxford. This book was released on 2005-09-15 with total page 434 pages. Available in PDF, EPUB and Kindle. Book excerpt: Accounting and the role of accountants has permeated the modern societies. For the most part we have accepted the impartiality and objectivity of accounting and not recognized how accounting systems are embedded in a country's economic and legal framework, much of which is in turn shaped by political processes. This web of interactions results in complex economic and political questions which require accounting researchers to focus on several related trends: information economics, regulatory economics, sociology, and political science. Although considerable progress has been made in the field of accounting, many fundamental questions are still subject to debate. In this book leading international scholars address a number of important questions: · What is the role of accounting in security valuation, decision making and contracting? · What can we learn from economics-based research in accounting? · What is the role of auditing and how can accounting standards be enforced? · What are the cost and benefits of accounting and disclosure regulation? · What is the role of accounting in society? · How does lobbying affect the political process of standard setting? · What are the consequences of the internationalization of standard setting? This seminal book will be of interest to academics, researchers, and graduate students of Accounting, Finance, Business Studies, Sociology, and Political Economy.

Download or read book The Economics and Politics of Accounting written by Christian Leuz and published by Oxford University Press, USA. This book was released on 2005 with total page 448 pages. Available in PDF, EPUB and Kindle. Book excerpt: For the most part we have accepted the impartiality and objectivity of accounting and not recognized how accounting systems are embedded in a country's economic and legal framework. In this book, international scholars address a number of important questions about the role of accounting in society.