The effects of SFAS 131 geographic segment disclosures on the valuation of foreign earnings

Author

Ole-Kristian Hope, University of Toronto - Rotman School of Management
Tony Kang, Singapore Management UniversityFollow
Wayne Thomas, University of Oklahoma
Florin Vasvari, University of Toronto

Publication Type

Working Paper

Publication Date

2005

Abstract

Foreign operations are becoming increasingly important for U.S. companies. We investigate whether the market’s valuation of foreign earnings is a function of the firm’s geographic segment disclosures. Specifically, we examine the effects of an increase in the number of geographic segments disclosed and the inclusion of earnings measures in geographic segment disclosures following the adoption of SFAS 131. We find strong evidence that our proxies for increased disclosure are positively associated with the valuation of foreign earnings. Our results are robust to a number of sensitivity analyses. Taken together, our results suggest that the pricing of foreign earnings is associated with important aspects of the firm’s information environment.

Keywords

foreign earnings, SFAS 131, geographic segment disclosures, valuation

Discipline

Accounting | Finance and Financial Management

Research Areas

Corporate Reporting and Disclosure

Citation

Hope, Ole-Kristian; Kang, Tony; Thomas, Wayne; and Vasvari, Florin. The effects of SFAS 131 geographic segment disclosures on the valuation of foreign earnings. (2005).
Available at: https://ink.library.smu.edu.sg/soa_research/169

Creative Commons License

This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.