Inconsistent Segment Disclosure Across Corporate Documents



Market regulators in the US and Europe investigate cases of inconsistent disclosures when a company provides different information on the same topic in different documents. Focusing on operating segments, this paper uses hand-collected data from four different corporate documents of multi-segment firms to analyze the impact of inconsistent disclosure on financial analysts’ earnings forecast accuracy. Inconsistency that arises from further disaggregation of operating segments in some documents seems to bring in new information and increases analysts’ accuracy. Disclosing different, hard-to-reconcile segmentations, however, impedes analysts’ information processing and results in lower accuracy. These findings contribute to our understanding of the effects of managers’ disclosure strategy across multiple documents and have implications for regulators and standard setters’ work on a disclosure framework.

This seminar is organised by the Erasmus Accounting Research Group.