Work

What drives cross-segment diversity in returns and risks? Evidence from Japanese and U.S. firms

Year: 2010

Type: article

Abstract: The usefulness of segment reporting is grounded on the presumption of diversities of returns and risks across reported segments. We examine the effect of country-specific factors, reporting incentives, and choices on an ANOVA-based measure of cross-segment diversities (CSD) in risk and returns for a sample of Japanese and U.S. multi-segment firms. We find that, in contrast to our expectations, Japanese firms exhibit greater CSD than U.S. firms. Moreover, we find that in both countries CSD is driven especially by reporting incentives associated with profitability and foreign sales, but not by proprietary costs. Further, the manager's choice of the number of reported segments is an important factor affecting CSD.

Source: The International Journal of Accounting

DOI: 10.1016/j.intacc.2010.01.003

Authors: Pontus Troberg, Juha Kinnunen, Harri J. Seppänen

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

Funder: Kwansei Gakuin University

OpenAlex ID: W2171757230

FWCI: 7.837

Cites: 58

Cited by: 24

Related to: 10