Online from: 2005
Subject Area: Accounting and Finance
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|Title:||Forecasting confidence under segment reporting|
|Author(s):||Jacqueline Birt, (Department of Accounting & Finance, Monash University, Caufield East, Australia), Greg Shailer, (School of Accounting & Business Information Systems, The Australian National University, Canberra, Australia)|
|Citation:||Jacqueline Birt, Greg Shailer, (2011) "Forecasting confidence under segment reporting", Accounting Research Journal, Vol. 24 Iss: 3, pp.245 - 267|
|Keywords:||Accounting standards, Analysts, Australia, Experiment, Fineness theorem, Profit forecasting, Segment reporting, Value relevance|
|Article type:||Research paper|
|DOI:||10.1108/10309611111186993 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
|Acknowledgements:||The authors appreciate the helpful comments of the two anonymous reviewers and Natalie Gallery.|
Purpose – Changes in Australian segment reporting standards over the last decade changed the required disaggregation of segment information. The purpose of this paper is to investigate whether increased disaggregation has implications for users' confidence in decisions based on segment reports and perceptions of segment reporting usefulness.
Design/methodology/approach – Using an experiment based on the differences between the original AASB 1005 and the more detailed requirements of AASB 114, the authors test whether segment report users' confidence in forecasting and their perceptions of segment report usefulness differ between the different information sets provided under these standards.
Findings – It was found that the more disaggregated or finer reports based on AASB 114 provide significantly more confidence to users, compared to the coarser segment reports based on the original AASB 1005, but this is not associated with differences in segment report usefulness scores.
Research limitations/implications – The authors' experiment is based on AASB 1005 and AASB 114 and the results cannot be generalized to differences with other reporting standards. Examination of differences in recently released AASB 8 may reveal different implications for users' confidence and perceptions of usefulness. More generally, other tests of usefulness are needed to confirm whether opinions of usefulness that are not confirmed by decision-making practices provide a reliable basis for determining usefulness.
Practical implications – By confirming that decision makers' confidence can be increased by the provision of finer information sets, the authors' results have practical implications for accounting standard setting.
Originality/value – By testing the impact of report differences on user decision confidence, the paper addresses a previously overlooked issue.
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