Jurnal Umum
Discretionary Disclosure in Financial Reporting:An Examination Comparing Internal Firm Data to Externally Reported Segment Data
We use confidential, U.S. Census Bureau, plant-level data to investigate
aggregation in external reporting. We compare firms’ plant-level data to their published
segment reports by grouping a firm’s plants that share the same four-digit SIC code into
a “pseudo-segment.” We then determine whether each pseudo-segment is disclosed as
an external segment, or whether it is subsumed into a different business unit for external
reporting purposes. We show that a pseudo-segment is more likely to be aggregated
when the agency and proprietary costs of separately reporting the pseudosegment
are higher and when firm and pseudo-segment characteristics allow for more
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