The adoption of IFRS 8 – no headway made? Evidence from segment reporting practices in Germany

Nina Franzen · Barbara E. Weißenberger

30 citations0/0 files storedJournal of Applied Accounting Research

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

Abstract

Purpose – The purpose of this paper is to assess the changes in segment reporting practices of German listed firms under the new segment reporting standard IFRS 8. Design/methodology/approach – The authors compare hand-collected segment disclosures of German firms in the first IFRS 8 year with those reported in the last IAS 14R year. Findings – The authors do not find substantial changes in the segment disclosures of German firms under IFRS 8. While the number of reportable segments slightly increased, the amount of information disclosed for each reportable segment decreased. The same applies to geographic areas reported as secondary segments under IAS 14R compared to entity-wide disclosures under IFRS 8. Furthermore, even though more country-specific information was provided, many firms still disclosed only broad geographic areas. Research limitations/implications – Future research should extend the analysis to consider more than one year of data following IFRS 8’s adoption and to examine the impact of the standard on smaller firms. Moreover, investigating economic benefits for investors and other financial statement users following IFRS 8’s adoption could be an avenue for future research. Practical implications – The findings indicate that the International Accounting Standards Board’s (IASB) expectations regarding changes in segment reporting practices under IFRS 8 have only partially been met. The results also reveal some cases of segment reporting practice where compliance is at least questionable. Both findings are of interest to standard-setters and regulators. Originality/value – The paper provides new insights into the effects of IFRS 8’s adoption in Germany and thus contributes to the post-implementation review of IFRS 8 carried out by the IASB in 2012/2013. The study sheds light on the consequences of applying the “management approach” to segment reporting, thereby contributing to the theoretical discussion on the adequacy of the different concepts for disclosing segment information.

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References

1983Discretionary disclosure 2000The effect of international institutional factors on properties of accounting earnings 2003Incentives versus standards: properties of accounting income in four East Asian countries 1985Disclosure of Nonproprietary Information 1995Factors Influencing Voluntary Annual Report Disclosures By U.S., U.K. and Continental European Multinational Corporations 1998The Association between Competition and Managers' Business Segment Reporting Decisions 2007Segment Profitability and the Proprietary and Agency Costs of Disclosure 2005Managers' Motives to Withhold Segment Disclosures and the Effect of SFAS No. 131 on Analysts' Information Environment

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2017Capital market effects of mandatory IFRS 8 adoption: An empirical analysis of German firms 2019Does greater user representation lead to more user focused standards? An empirical investigation of IASB’s approach to standard setting 2019The impact of ERP utilisation experience and segmental reporting on corporate performance in the UK context 2017Geographic segment disclosures under IFRS 8: Changes in materiality and fineness by European, Australian and New Zealand blue chip companies

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