On Segment Identification, Relevance and Comparability

32 Pages Posted: 12 May 1999

See all articles by Clive R. Emmanuel

Clive R. Emmanuel

University of Glasgow - Glasgow Business School - Department of Accounting & Finance

Neil Garrod

Thames Valley University - Professional Studies

Abstract

The adoption in the USA and Canada of the management approach to identifying reportable segments places relevance as the overriding concern over comparability. There is a view, however, that managers of capital may be disadvantaged by this focus. Under current UK regulations either the management or the risk-return approach to segment identification is admissible. This reporting jurisdiction is therefore used in this study to examine the relationship between segment identification and disclosure usefulness by testing comparability with industry benchmarks and gauging relevance against consolidated disclosure. The findings indicate that for a significant minority of companies both comparability and relevance are lacking. Much of this results from non-disclosure. The reluctance to disclose disaggregated net asset data in particular, suggests that the use of internal measures of performance are non-comparable with industry benchmarks. We conclude that relevance and comparability are inescapably linked and that a focus on either one or the other degrades the overall usefulness of segmental disclosure.

JEL Classification: M41, M44, M45

Suggested Citation

Emmanuel, Clive R. and Garrod, Neil W., On Segment Identification, Relevance and Comparability. Available at SSRN: https://ssrn.com/abstract=163048 or http://dx.doi.org/10.2139/ssrn.163048

Clive R. Emmanuel (Contact Author)

University of Glasgow - Glasgow Business School - Department of Accounting & Finance ( email )

65-71 Southpark Avenue
Glasgow, G12 8LE
United Kingdom
+44 141 330 5426 (Phone)
+44 141 330 4442 (Fax)

Neil W. Garrod

Thames Valley University - Professional Studies ( email )

Kings Road
Reading, Berkshire RG1 4HJ UK
United Kingdom

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