The Predictive Ability of Geographic Segment Disclosures by U.S. Companies: SFAS No. 131 vs. SFAS No. 14

Author(s)

Bruce K. Behn, University of Tennessee at Chattanooga
Nancy B. Nichols, James Madison University
Donna L. Street, University of DaytonFollow

Document Type

Article

Publication Date

2002

Publication Source

Journal of International Accounting Research

Abstract

This research considers whether recent modifications to segment reporting adequately address analysts' concerns regarding the usefulness of geographic data. Forecast errors for models utilizing SFAS No. 131 geographic sales data are compared to forecast errors for models utilizing SFAS No. 14 geographic sales data. The results indicate a significant improvement in the predictive accuracy of geographic sales disclosures provided under SFAS No. 131. Additional analysis suggests this enhanced predictability may be associated with the revised requirements that companies report sales for the country of domicile and for each individually material country. Overall, our findings appear to support the FASB's argument that segment information by country is more informative and useful. Based on our findings, recommendations are presented regarding possible amendments to SFAS No. 131 that may further enhance the predictive ability of geographic segment data.

Inclusive pages

31-44

ISBN/ISSN

1542-6297

Comments

Copyright © 2002, American Accounting Association

Publisher

American Accounting Association

Volume

1

Issue

1

Peer Reviewed

yes

eCommons Citation

Behn, Bruce K.; Nichols, Nancy B.; and Street, Donna L., "The Predictive Ability of Geographic Segment Disclosures by U.S. Companies: SFAS No. 131 vs. SFAS No. 14" (2002). Accounting Faculty Publications. 30.
https://ecommons.udayton.edu/acc_fac_pub/30