Article2006

Changing pattern of competitive disadvantage from disclosing financial information

Mohammad Talha · Abdullah Sallehhuddin Abdullah Salim · Junaini Mohammad

26 citations0/0 files storedManagerial Auditing Journal

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Auditing, Earnings Management, Governance Accounting Theory and Financial Reporting Accounting and Organizational Management

Abstract

Purpose To empirically examine the changing pattern of competitive disadvantage experienced by the reporting companies in disclosing segmental information in the Malaysian environment. Design/methodology/approach The study consists of a final sample of 116 Malaysian companies listed on the Malaysian Bourse for the years 2000‐2002. Four hypotheses were developed to investigate the relationship between segmental information disclosure and competitive disadvantage. Adopting weighted average correlation (WAC) techniques and total performance index (TPI), a multivariate least square regression model was employed to test the four formulated hypotheses. Findings The statistical analysis employed provides a mixed pattern yet comprehensive understanding of relationship between segmental information disclosure and competitiveness level among 116 reporting companies listed in Malaysian Bourse from the years of 2000‐2002. Research limitations/implications The proprietary theory assumes at least two forms that differ on the basis of who are included in the proprietary group. Secondly, the existence of discretionary judgments among managers in determining the segment definition, items to be disclosed and level of materiality involved. Lastly, the size of final sample leads to caution in generalizing the analysis. Practical implications The results provide insights to interested groups such as accounting standard bodies, affected companies and the accounting profession, specifically in the Malaysian environment with the introduction of the new standard on segmental information disclosure known as MASB 22 segment reporting. Originality/value The study is very timely especially with the introduction of new accounting standard governing segmental reporting by companies in Malaysian financial reporting environment. The great value of this study is highlighted by the effort to empirically investigate the competitive disadvantage experienced by the reporting companies as they disclose segmental information as required by the new standard.

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References

1982Financial Reporting: An Accounting Revolution.1990Voluntary disclosure with a strategic opponent 1998The Association between Competition and Managers' Business Segment Reporting Decisions 1996Segment Reporting to the Capital Market in the Presence of a Competitor 1985Financial Accounting and Reporting 1992The effects of line‐of‐business reporting on competition in oligopoly settings*1981Developments in Financial Reporting 1968External reporting for segments of a business

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2013Determinants of segmental disclosures: evidence from the emerging capital market of Jordan 2014Preference in Presentation or Impression Management: A Comparison Study between Chairmen’s Statements of the Most and Least Profitable Australian Companies 2013Impact of Corporate Governance on Disclosure Quality: Empirical Evidence from Listed Banks in Malaysia 2009What prompts firms to choose between business and geographic segments as a primary segment?

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