Segment disclosure: an exploratory study of its impact and motivation in the Indian context

Abstract

This study looks at the introduction of Accounting Standard 17 in India in 2001 and the effects it has had on firms segment reporting levels, analyst forecast accuracies and whether there are any firm specific characteristics that influence reporting. Prior studies in the US has shown that after the introduction of SFAS-131, segment reporting levels and analyst forecasts have improved. There has been very little prior research that has been conducted in the Indian context. This paper has considered a dataset of 500 listed companies across 10 years, both prior to and after the introduction of the accounting standard. The study shows that companies disclosing segment data have increased from5% to 70% over the period considered. Also, analyst forecast accuracies have improved across all levels of segment reporting.