The segment disclosures of multinational companies provide strategic information. We use the location characteristics of geographic segments to identify the reasons for withholding or disclosing segments. We examine segment data from around the adoption of IFRS 8, a reporting standard that requires firms to reveal more disaggregated information. Consistent with a proprietary cost motive for nondisclosure, we find that segments in regions that are deemed better for business tend to be hidden, while higher entry barriers for a segment are positively related to disclosure. These effects appear to be stronger for firms for which proprietary cost motives are more important. Among the previously unrevealed segments, proprietary costs explain the nondisclosure of segment earnings and other relevant financial information for investors.

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Keywords segment reporting, proprietary disclosure costs, IFRS 8
JEL Accounting (jel M41)
Persistent URL,
Series ERIM Top-Core Articles
Journal Journal of Business Finance & Accounting
Leung, P.Y.E, & Verriest, A.J.M. (2019). Does location matter for disclosure? Evidence from geographic segments. Journal of Business Finance & Accounting. doi:10.1111/jbfa.12375