The effects of SFAS 131 geographic segment disclosures on the valuation of foreign earnings
Foreign operations are becoming increasingly important for U.S. companies. We investigate whether the market’s valuation of foreign earnings is a function of the firm’s geographic segment disclosures. Specifically, we examine the effects of an increase in the number of geographic segments disclosed...
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| Main Authors: | , , , |
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| Format: | text |
| Language: | English |
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Institutional Knowledge at Singapore Management University
2005
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| Subjects: | |
| Online Access: | https://ink.library.smu.edu.sg/soa_research/169 https://ink.library.smu.edu.sg/context/soa_research/article/1168/viewcontent/SSRN_id591245.pdf |
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| Institution: | Singapore Management University |
| Language: | English |
| Summary: | Foreign operations are becoming increasingly important for U.S. companies. We investigate whether the market’s valuation of foreign earnings is a function of the firm’s geographic segment disclosures. Specifically, we examine the effects of an increase in the number of geographic segments disclosed and the inclusion of earnings measures in geographic segment disclosures following the adoption of SFAS 131. We find strong evidence that our proxies for increased disclosure are positively associated with the valuation of foreign earnings. Our results are robust to a number of sensitivity analyses. Taken together, our results suggest that the pricing of foreign earnings is associated with important aspects of the firm’s information environment. |
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