Does Interim Segment Disclosure Matter? A Study on the Interim Segment Reporting Requirement under SFAS No. 131 = 분기별 사업부문정보공시는 중요한가? 미국 SFAS No. 131하에서의 분기별 사업부문정보공시 효과 연구

다국어 초록 (Multilingual Abstract)

This paper investigates SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, effective for all fiscal years commencing after December 15th, 1997. Under SFAS No. 131, firms are required to disclose segment information for interim periods (quarterly segment reporting) to share- holders. This provision was cited as one of the most important improvements needed by the AICPA Special Committee on Financial Reporting (SFAS No. 131, 50) and financial statement users contended that, to be timely, segment information is needed more often than annually and that the difficulties of preparing it on an interim basis could be overcome (SFAS No. 131, 98). This study examines the effect of the disclosure frequency (annual versus quarterly segment reporting) change, another element of an overall disclosure. Unlike voluntary interim segment reporting, SFAS No. 131 applies to all firms and therefore, this setting provides an opportunity to study the effect of interim segment reporting on information environments, controlling the managers`internal motivation to provide voluntary interim segment reports. This study examines the effect of implementation of SFAS No. 131 by assessing the effect of interim period segment information disclosure on companies` information environments. The empirical results provide evidence that segment information disclosure has a mitigating effect on information asymmetry. I find that the adoption of SFAS No. 131 has differential effects based on whether or not firms are mandated to newly disclose their interim segment information. Assuming mandatory interim segment disclosers as higher proprietary cost firms, I also investigate whether those firms lose a competitive advantage. The results show that interim segment information disclosure affects firms` abnormal profit. Most prior studies examine the determinants of cross-sectional variation in disclosure levels and the benefits of increased disclosure. This study contributes to the extant literature by examining the effect of the disclosure frequency (annual versus quarterly segment reporting) change, another element of an overall disclosure and provides insights into the effect of interim segment reporting requirements under SFAS No. 131.

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