Long Term Effects of Statement of Financial Accounting Standards 131 (SFAS 131) on Geographic Disclosures of U.S. Firms
- Author
- Frutiger, Adam
- Published
- [University Park, Pennsylvania] : Pennsylvania State University, 2015.
- Physical Description
- 1 electronic document
- Additional Creators
- Havranek, Susan and Schreyer Honors College
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- honors.libraries.psu.edu , Connect to this object online.
- Restrictions on Access
- Open Access.
- Summary
- Investors utilize various aspects of financial statements to value firms. Although certain items such as the balance sheet and income statement are very important, other items offer greater insight into future earnings and financial health. One such item is geographical segment information, disclosing geographic sources of revenues. In 1997, the Financial Accounting Standards Board (FASB) released the Statement of Financial Accounting Standards 131 (SFAS 131) to provide guidance for the geographical segment disclosure. This standard calls for a managerial approach, allowing a firm's management to set material levels for disclosures. In addition, SFAS 131 requires that material geographic segments be identified as the individual nation where revenue is generated. This thesis examines the long-term effects of SFAS 131 on geographic segment disclosures of Fortune 500 U.S. firms. Unlike prior studies that examine the effects using a very short sample period of 1997 to 1998, this study's sample period covers a 15-year period from 1998 to 2012. The longer sample period allows a comprehensive examination of the reporting behavior of firms to determine whether firms continue to use the managerial approach as intended by the FASB. The thesis investigates both levels of materiality set by firms and the fineness of the disclosures. The results show that firms report the majority of segments at or below a 10% threshold. Also, fineness tests show a strong relationship between the foreign sales and the segment type. As the percentage of foreign sales increases, the fineness of the disclosures increase. Consistent with the results of prior studies, these findings show the managerial approach continues to provide more material and specific information to investors and other stakeholders.
- Other Subject(s)
- Genre(s)
- Dissertation Note
- B.S. Pennsylvania State University 2015.
- Technical Details
- The full text of the dissertation is available as an Adobe Acrobat .pdf file ; Adobe Acrobat Reader required to view the file.
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