The Usefulness of Segment Information

• In Event: Financial and regulatory reporting, at home and abroad.
  In Dialogue Session: Financial and Regulatory Reporting, at Home and Abroad.

Abstract

This paper identifies segment characteristics that help make industry segment reporting more useful in equity valuation. Those characteristics are difference in segments’ growth potential, the relative size of segments, and the magnitude of correlation in segment earnings. Usefulness is measured by examining the percentage increase in R2 and the incremental coefficient of earnings in regressions of stock returns on disaggregate segment earnings relative to aggregate earnings.

Authors

• Sudipta Basu, Temple University

• Edward B Douthett, George Mason University

• Steve C Lim, Texas Christian University