The issue of providing segment disclosures has renewed significance because the Securities & Exchange Commission (SEC) has been considering the extension of segment disclosures, both line-of-business (LOB) and geographically segmented (GEOG), to all interim financial statements. To determine whether GEOG data provide incremental information about the earnings process, the specific contribution of sales and income GEOG data was evaluated by estimating their predictive ability. Two sets of GEOG predictions were used in the predictive accuracy tests. The results indicated that GEOG data enhance predictive ability for annual income and sales. The usefulness of these data is reduced because detailed geographic segments are frequently not reported and because annual forecasts of country-specific growth and exchange rates are not accurate.
Balakrishnan, Ramji, Trevor Harris, and Pradyot K. Sen. "The Predictive Ability of Geographic Segment Disclosures." Journal of Accounting Research 28, no. 2 (Fall 1990): 305-25.
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