| Up to now, there is no study investigating the comprehensive effect of firm's adoption ofSegment Reporting Rules, which is effective for fiscal years beginning after December 29,2000. This study investigates the Rules' real impacts on both providers and users, andquantitative and qualitative aspects of information. This paper employs empiricalmethods to examine its effects.Firstly, this paper explains the rationales after segment reporting with a view from boththe quality of accounting information and information economics. The author identifiesthe objectives of segment reporting, and analyzes the major uses and meanings ofsegment information in our country. Secondly, the author introduces briefly the history ofwestern countries' regulations on segment disclosure, and divides ours into five periods.The second part ends with a short list of improvements of our new segment reportingstandard.In the third part, the author reviews academic achievements of positive research both onthe usefulness of segment disclosure and the effect of adoption of segment standards.With the help of segment data comparison in the fourth part and model regression in thefifth part, the author finds evidence that the adoption of the Rules had positive impact onthe supply of segment information, such as disaggregation of information and theconsistency between segment information in the notes to the financial statements andthose in the board of directors' report. The affected firms increased the amount ofinformation available to investors. Such information was improved modestly. However,to the benefit of users, the incremental information did not have significant impact on thestock market's ability to anticipate future earnings (5% of significance). Its impact onpre-rules multi-segment firms was bigger than that of pre-rules single-segment firms.This paper ends with several suggestions to perfect our new segment disclosure standardsbased on the results of the positive research. |
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