SFAS 14's geographic segment disclosures and the ability of security analysts to forecast earnings

Scope and method of study. The objective of this study is to empirically test the usefulness of the geographic segment disclosures mandated by SFAS 14 by determining if financial analysts' forecasts improved for multinational companies as a result of the geographic segment disclosures required by SFAS 14.;The t-test was used to compare change in mean adjusted forecast accuracy between treatment firms and control firms.;Findings and conclusions. No evidence existed that SFAS 14 improved the ability of analysts to forecast earnings. The conclusion of this study is that SFAS 14 did not improve the ability of analysts to forecast earnings.;The treatment firms in this study were U.S. companies that had operations in at least one foreign region but did not disclose geographic segment data prior to SFAS 14. Two general types of control firms were used in this study. One type was U.S. companies with foreign operations in at least one foreign region that voluntarily disclosed geographic segment data prior to SFAS 14. The other type of control firm was domestic companies without foreign operations that were unaffected by SFAS 14's mandated disclosure of geographic segment data.