Exploring the Influence of Institutional Factors on the Segment Disclosure Practices of Large European Listed Entities

Posted: 6 Oct 2018

See all articles by Nadia Albu

Nadia Albu

Bucharest Academy of Economic Studies

Ann Tarca

University of Western Australia

Date Written: September 13, 2018

Abstract

This study investigates how institutional pressures influence segment-related disclosures in the footnotes to financial statements and in the narrative part of the annual reports for 246 non-financial European listed companies. We analyze occurrence, clarity and consistency of segment disclosures regarding segment identification and the measures reported by segment. We employ Oliver’s (1991) framework to explore variations in segment disclosures across our sample and to examine the role of the institutional factors for different disclosure strategies. Our analysis suggests that different types disclosure can be linked to specific institutional factors. Mandatory disclosure is explained mostly by Constituents (ie capital market variables) and Control factors (enforcement) while Clarity of disclosures is more likely to be affected by Constituents and Content (proxies for proprietary costs) factors. Companies are more likely to use compromise, avoidance and defiance strategies in determining their segment reporting disclosure behaviours. The differences in the disclosure strategy followed by companies is mostly driven by Constituents and Content. Our evidence will be informative for practitioners, standard setters and regulators in particular as they seek to improve disclosure practices in financial reports.

Keywords: IFRS 8, Segment Disclosures, Disclosure Quality, Institutional Theory

JEL Classification: M41

Suggested Citation

Albu, Nadia and Tarca, Ann, Exploring the Influence of Institutional Factors on the Segment Disclosure Practices of Large European Listed Entities (September 13, 2018). Available at SSRN: https://ssrn.com/abstract=3249057

Nadia Albu (Contact Author)

Bucharest Academy of Economic Studies ( email )

Piata Romana No. 6
Sect. 1
Bucharest
Romania

Ann Tarca

University of Western Australia ( email )

Business School
35 Stirling Highway
Crawley WA 6009
Australia
+61 8 6488 3868 (Phone)
+61 8 6488 1047 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
225
PlumX Metrics