The adoption of IFRS 8 – no headway made? Evidence from segment reporting practices in Germany

Abstract

Purpose

The purpose of this paper is to assess the changes in segment reporting practices of German listed firms under the new segment reporting standard IFRS 8.

Design/methodology/approach

The authors compare hand-collected segment disclosures of German firms in the first IFRS 8 year with those reported in the last IAS 14R year.

Findings

The authors do not find substantial changes in the segment disclosures of German firms under IFRS 8. While the number of reportable segments slightly increased, the amount of information disclosed for each reportable segment decreased. The same applies to geographic areas reported as secondary segments under IAS 14R compared to entity-wide disclosures under IFRS 8. Furthermore, even though more country-specific information was provided, many firms still disclosed only broad geographic areas.

Research limitations/implications

Future research should extend the analysis to consider more than one year of data following IFRS 8’s adoption and to examine the impact of the standard on smaller firms. Moreover, investigating economic benefits for investors and other financial statement users following IFRS 8’s adoption could be an avenue for future research.

Practical implications

The findings indicate that the International Accounting Standards Board’s (IASB) expectations regarding changes in segment reporting practices under IFRS 8 have only partially been met. The results also reveal some cases of segment reporting practice where compliance is at least questionable. Both findings are of interest to standard-setters and regulators.

Originality/value

The paper provides new insights into the effects of IFRS 8’s adoption in Germany and thus contributes to the post-implementation review of IFRS 8 carried out by the IASB in 2012/2013. The study sheds light on the consequences of applying the “management approach” to segment reporting, thereby contributing to the theoretical discussion on the adequacy of the different concepts for disclosing segment information.

Citation

Franzen, N. and Weißenberger, B.E. (2015), "The adoption of IFRS 8 – no headway made? Evidence from segment reporting practices in Germany", Journal of Applied Accounting Research, Vol. 16 No. 1, pp. 88-113. https://doi.org/10.1108/JAAR-05-2013-0037