Geographic segment disclosures under IFRS 8: Changes in materiality and fineness by European, Australian and New Zealand blue chip companies

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Geographic segment disclosures under IFRS 8: Changes in materiality and fineness by European, Australian and New Zealand blue chip companies Sandra J. Cereola a,∗, Nancy B. Nichols a, Donna L. Street b a b

James Madison University, Harrisonburg, VA, USA University of Dayton, Dayton, OH, USA

a r t i c l e

i n f o

Article history: Available online xxx Keywords: International Financial Reporting Standards IFRS 8 Geographic areas Segment reporting IASB post-implementation review Materiality Fineness

a b s t r a c t This study examines how the adoption of International Financial Reporting Standard (IFRS) 8, Operating Segments, changed the entity-wide geographic segment reporting by European, Australian and New Zealand blue chip companies. The focus is on the revised requirements that companies disclose revenues for the country of domicile and other material countries. Specifically, it investigates the materiality level companies use to determine material countries and whether the revised requirements result in a finer set of geographic information than previously disclosed under International Accounting Standard (IAS) 14R. The study finds a significant decrease in the number of companies reporting only broad geographic regions and a significant increase in the number of companies reporting country specific segments and a mix of countries and regions after the adoption of IFRS 8. The increase in companies reporting country specific and mixed segments indicates that the requirement to disclose material countries under IFRS 8 resulted in a significant number of companies reporting disaggregated revenues at the individual country level. To the extent country specific information is more useful, financial analysts and the International Accounting Standards Board (IASB) should welcome this result. All three fineness measures increase significantly with the adoption of IFRS 8. These results indicate that the adoption of IFRS 8 did improve the fineness of the geographic disclosures provided by companies and suggests that the geographic data provided under IFRS 8 is less aggregated than the disclosures under IAS 14R. © 2017 Elsevier Ltd. All rights reserved.

The International Accounting Standards Board (IASB) issued International Financial Reporting Standard (IFRS) 8, Operating Segments in November 2006, effective for periods beginning on or after January 1, 2009 (IASB, 2006). The revision of International Accounting Standard (IAS) 14R, Segment Reporting (International Accounting Standards Committee (IASC) 1997), focused on reducing differences between IFRSs and the US Statement of Financial Accounting Standard (SFAS) 131, Disclosures about Segments of an Enterprise and Related Information (now Accounting Standards Codification (ASC) 280) (Financial Accounting Standards Board (FASB), 1997). IFRS 8 effectively adopts SFAS 131, requiring operating segment and entity-wide disclosures. The entity-wide disclosures require companies to disclose two items of geographical informa-

∗

Corresponding author. E-mail addresses: [email protected] (S.J. Cereola), [email protected] (N.B. Nichols), [email protected] (D.L. Street).

tion: revenues from external customers and non-current assets.1 The entity-wide disclosures replace the IAS 14R secondary segment disclosures that required the disclosure of revenue, assets, and capital expenditures. IFRS 8 requires geographic disclosures for an entity’s country of domicile, all foreign countries in the aggregate, and individual countries, if material, with no defined materiality threshold. In contrast, IAS 14R provides a 10% materiality threshold for determining when a geographic segment must be reported. The IASB references the FASB’s Basis for Conclusions (BC) in support of its decision to adopt the requirements of SFAS 131 (IASB, 2006, BC52). The FASB’s BC includes two specific benefits for country information. The first benefit is a reduced burden on preparers since companies are likely to review countries with material operations. The second benefit is that country specific information is more useful;

1 All companies must report the entity-wide geographic information unless the information is provided as part of the reportable segment disclosures (IFRS 8, paragraph 31).

https://doi.org/10.1016/j.racreg.2017.09.003 1052-0457/© 2017 Elsevier Ltd. All rights reserved.

Please cite this article as: S.J. Cereola et al., Geographic segment disclosures under IFRS 8: Changes in materiality and fineness by European, Australian and New Zealand blue chip companies, Research in Accounting Regulation (2017), https://doi.org/10.1016/j.racreg.2017.09.003

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it is easier to interpret than more aggregated information, especially when assessing economic risk concentrations. The BC specifically notes that “countries in contiguous areas often experience different rates of growth and other differences in economic conditions” (SFAS 131, BC paragraph 105). This study evaluates the geographic information disclosed by the largest European, Australian and New Zealand companies in the year of adoption of IFRS 8, typically in their 2009 annual reports. It specifically focuses on the issues of materiality and fineness. The materiality analysis investigates the threshold levels used by management in determining the disclosure of individual country information. The fineness analysis investigates whether geographic disclosures under IFRS 8 are “finer” than the disclosures under IAS 14R. Fineness is defined as the extent to which total revenues are disaggregated into specifically defined geographic areas and the aggregation level of the geographic areas reported. Analysts argue that the more disaggregated the level of disclosure, especially disaggregation at the country specific level, the more useful the information (Association for Investment Management and Research (AIMR), 1992). The study also provides a limited analysis of disclosure differences between European and Australian and New Zealand (AU/NZ) companies. The IASB completed the post-implementation review (PIR) of IFRS 8 in July 2013 (IASB, 2013) and issued an Exposure Draft, Improvements to IFRS 8 Operating Segments, in March 2017 (IASB, 2017). Investor feedback obtained during the PIR questions whether the geographical information provided under IFRS 8 distinguishes between different regions in a way that is useful for investors. The Exposure Draft (ED) does not propose any amendments to the entity-wide disclosures because the PIR concludes that the “feedback received did not identify a clear or consistent problem that we need to address and, consequently, we do not think this area warrants any further action at this time” (IASB, 2013, p. 24). The findings of this study will inform the IASB’s PIR project team and address the concern raised by some investors regarding the level of geographic information provided under the new standard. The next section reviews the published geographic segment literature. The sample selection, research methodology, and results sections follow. The last section includes the study’s summary and conclusions. Literature review Numerous studies investigate the broad topic of segment reporting under SFAS 131 and IFRS 8. See Moehrle, Mohrman, Reynolds-Moehrle, and Stuerke (2009) and Nichols, Street, and Tarca (2013), for reviews of segment reporting literature including research addressing the adoption of IFRS 8 and SFAS 131. Most IFRS 8 studies investigate the changes in operating segments including recent studies addressing analysts’ forecasts (Andre, Filip, & Moldovan, 2016; He, Evans, & He, 2016) and the usefulness of segment information (Aleksanyan & Danbolt, 2015; Kajüter & Nienhaus, 2017). This study analyzes entity-wide geographic disclosures, therefore, the literature review focuses on geographic segment research. IFRS 8 geographic disclosure research Numerous studies investigate the impact of adopting IFRS 8 on the number of geographic segments disclosed. Crawford, Extance, Helliar, and Power (2012) report findings of the impact of adopting IFRS 8 on 150 U.K. companies. Their analysis reveals an increase in the average number of geographic segments reported with 30% of the companies increasing the number of geographic segments after adoption. Nichols, Street, and Cereola (2012) investigate the imPlease

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pact of IFRS 8 on segment reporting by 335 European companies from 14 countries. They find that the number of companies utilizing the broad, vague geographic groupings for which IAS 14R was criticized drops significantly. Kang and Gray (2013) analyze the impact of adopting AASB 8 on 189 companies listed on the Australian Stock Exchange. Although the study focuses on operating segments, they note that the geographic disclosures did not change for most companies. Franzen and Weiβ enberger (2015) find no substantial changes in segment disclosures of German firms under IFRS 8. One study (Leung & Verriest, 2015) investigates the changes in geographic segment disclosures under IFRS 8 by European companies with greater than 50% foreign sales and whether the changes had economic and informational consequences. They find that IFRS 8 led to more disaggregated geographic information but a reduced number of reported items by geographic location. They did not find a significant impact of adopting IFRS 8 on analyst forecast accuracy, forecast dispersion, market liquidity or cost of equity capital. Leung and Verriest’s (2015) analysis combines the geographic disclosures of companies reporting geographic operating segments and companies reporting entity-wide geographic information. This study differs from Leung and Verriest (2015) by focusing only on entity-wide geographic disclosures and whether the fineness of these disclosures improved under IFRS 8. The country of domicile and material country disclosure requirements apply only to entitywide disclosures. Therefore, focusing on the fineness and materiality of only entity-wide disclosures will inform investor concerns about entity-wide geographic disclosures identified in the PIR of IFRS 8. Overall, the IFRS 8 studies indicate that companies are reporting more geographic segments and more country specific segments under the new standard. Although finding an overall increase in country specific disclosures, many studies raise a concern regarding the continued use of broad geographic regions after the adoption of IFRS 8. SFAS 131 research In IFRS 8 s Basis for Conclusions (BC6), the IASB summarizes the findings of academic research on SFAS 131 in support of its decision to adopt the SFAS 131 provisions. In addition, several studies review the literature investigating operating segment disclosures of US firms under SFAS 131 (see Moehrle et al., 2009; Nichols et al., 2013) as the Securities and Exchange Commission and the FASB continue to evaluate potential changes to the standard (Wang & Ettredge, 2015). Since this study addresses only entity-wide geographic disclosures, the following literature discussion is limited to SFAS 131 geographic disclosure research. Nichols, Street, and Gray (20 0 0) investigate the impact of SFAS 131 on geographic disclosures by 158 US companies. Results show the number of geographic segments and country specific disclosures increase significantly under SFAS 131. However, many companies with foreign sales representing 30% or more of total sales failed to report any individual country information other than country of domicile and 44% of the sample reported a broad geographic area exceeding 25% of sales. The authors conclude that although SFAS 131 resulted in the more country specific disclosures, US firms continue to use highly aggregated geographic categories. Doupnik and Seese (2001) evaluate the materiality level used to provide country specific information and the fineness of geographic disclosures after adopting SFAS 131 for 254 Fortune 500 companies with entity-wide geographic disclosures. The materiality results show that more than 70% of the sample report information for a country generating less than 10% of total revenues. Doupnik and Sesse’s (2001) fineness results are mixed. Using a weighting scale based on the fineness of the geographic data (from 0 for “rest of world” to 3 for an individual country), the study finds segment

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no significant increase in the fineness measure. However, when the weight for individual country data is increased to 4 or 8, the increase in the fineness measure is significant. The authors conclude that after using an increased weighting scale, there is an improvement in the fineness of the geographic disclosures for a large percentage of companies after adopting SFAS 131. Behn, Nichols, and Street (2002) evaluate the usefulness of SFAS 131 geographic segment disclosures by comparing the predictive ability of geographic sales disclosures under SFAS 131 and SFAS 14. Using both perfect foresight and random walk forecasts, they find a significant improvement in the predictive accuracy of geographic sales disclosures provided under SFAS 131. Additional analysis finds that the greatest improvement in predictive accuracy is for companies reporting country specific information. Their results support the FASB’s argument that segment information by country is more informative and useful. Both IFRS 8 and SFAS 131 dropped one disclosure requirement from the previous segment standard, SFAS 131 eliminates the disclosure of a measure of profitability by geographic area and IFRS 8 eliminates the disclosure of capital additions by geographic area. A number of SFAS 131 studies analyze the impact of eliminating the geographic earnings disclosure. These studies investigate the impact on investors and analysts ability to predict earnings (Hope & Thomas, 2008; Hope, Thomas, & Winterbotham, 2006), the impact on investors’ pricing of foreign earnings for those companies that continue to disclose foreign earnings (Hope, Kang, Thomas, & Vasvari, 20 08,20 09) and the impact on information asymmetry (Hope et al., 2006). Since IAS 14R did not require an earnings disclosure, a detailed discussion of these studies is not included. Investor feedback obtained during the PIR questions whether the geographical information provided under IFRS 8 distinguishes between different regions in way that is useful for investors (IASB, 2013). Previous research investigating the change in geographic segment disclosures under IFRS 8 finds an increase in the number of segments disclosed but raises concerns about the continued use of broad geographic categories. This study extends the prior research by evaluating the change in the level of geographic aggregation (fineness) with the adoption of IFRS 8. Sample selection and research methodology This research analyzes the change in entity-wide geographic segment reporting under IFRS 8 for companies comprising the top tier index of 20 European stock exchanges (Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland, United Kingdom) and the top tier index in Australia and New Zealand. The study examines information obtained from the annual reports for the year of adoption and the year preceding adoption.2 Table 1 shows the determination of the final sample. The crosslisted companies are assigned to the index associated with their country of domicile and excluded from the index where they are cross-listed. Financial companies, utilities and insurance companies are excluded due to their unique industry attributes.3 Of the 478 remaining companies, the 100 companies reporting geographic segments as their operating segments and not providing 2 IFRS 8 became mandatory for financial years commencing January 1, 2009 and later. Thus, companies with year-ends other than December 31 were first required to follow IFRS 8 during 2010. For companies that early adopted, the analysis includes data from the year of adoption and the year preceding adoption. 3 Nichols, Bishop, & Street (2002) analyzed the impact of SFAS 131 on the banking industry. The study found that SFAS 131 had a minimal impact on geographic segment reporting in the banking industry. We analyzed the geographic reporting of the 70 banks excluded from our sample and found no significant results in the banking industry, similar to the SFAS 131 results of Nichols et al. (2002).

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any entity-wide geographic disclosures under IFRS 8 and the 25 additional companies that do not disclose any geographic information are excluded from the sample. Thus, the final sample includes 353 companies (306 European companies and 47 Australian and New Zealand companies).4 Materiality threshold IFRS 8 requires that companies disclose revenues from external customers attributed to (1) the country of domicile and (2) all other countries in total. It also requires separate disclosure of revenues attributed to an individual foreign country if those revenues are material. IFRS 8 does not define materiality for purposes of individual country disclosures, leaving this determination to management. Unless management discloses the materiality level, one cannot know with certainty a company’s materiality threshold for determining when to disclose individual foreign country revenues. However, by evaluating the actual individual country disclosures, the study can determine an upper bound on the company’s materiality threshold.5 The study assumes that management determines the materiality of individual country revenues by comparing country specific revenues to total revenues. If the individual country’s percentage of total revenues exceeds the company’s materiality threshold, then the individual country’s revenue would be separately disclosed. This study determines the upper bound on the company’s materiality threshold by determining the percentage of total revenue for each individually disclosed country and identifying the country with the smallest percentage of total revenues (other than the country of domicile). The percentage for the “smallest country” provides evidence of management’s upper bound for a country to be considered material. For example, in 2009 Ericsson discloses revenue for four countries including Sweden, the country of domicile. The percentage of total revenues ranges from 7% to 10% for the non-domicile countries. The study infers that Ericsson’s management uses a materiality threshold of no greater than 7% of total revenues. It is not possible to determine if management’s actual materiality threshold is less than 7%. For example, management’s materiality cutoff may actually be 5%, but the country with the smallest percentage over 5% had revenues equal to 7% of total revenues. The addition of the country of domicile disclosure under IFRS 8 is also of interest. Given the global reach of many large European and AU/NZ companies, the country of domicile revenues may be smaller than revenues in some of the individual countries disclosed. Therefore, the study compares the percentage of total revenue for the country of domicile to the individually material country disclosures. Fineness measures The study uses three measures to evaluate the impact of IFRS 8 on the fineness of geographic disclosures. Similar to prior studies, the first measure counts the number of geographic segments provided under IAS 14R and IFRS 8. The second measure averages the segments’ aggregation levels under each standard. The third measure weights the segments’ aggregation levels by the percentage of total revenues reported in the segment under each standard. The

4 The final sample consists of 180 manufacturing companies (51%), 40 mining companies (11%), 29 service companies (8%), 23 construction companies (7%), 25 communication companies (7%), 20 transportation companies (6%), 17 wholesale trade companies (5%), 11 retail trade companies (3%), and 8 agricultural companies (2%). 5 The materiality level/threshold in the study refers to the materiality level/threshold the company uses for public disclosures.

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Table 1 Sample selection process by country (index). By country

Top – tier national index

Companies comprising index

Austria Belgium Czech Denmark Finland France Germany Greece Hungary Ireland Italy Luxembourg Netherlands Norway Poland Portugal Spain Sweden Switzerland United Kingdom Europe Subtotal Australia New Zealand Total

ATX BEL 20 PX OMXC 20 OMXH 25 CAC 40 + Next 20 DAX 30 + MDAX 50 Athex 20 BUX ISEQ 20 MIB 30 LUXX AEX OBX WIG 20 PSI IBEX 35 OMSX 30 SMI FTSE 100

20 20 13 19 24 60 80 20 12 20 40 12 25 25 20 20 35 30 20 101 616 48 48 712

ASX 50 NZX 50

Annual report not in English

CrossListed, US GAAP, other 1 2 1 3 2

2 1 2 1 3

4 2

2 2 4 1 25 2 1 28

1

9

9

Financial, utilities & insurance

Remaining Companies

Geographic primary segments∗

8 8 3 4 3 13 14 10 3 4 15 3 4 3 10 5 15 5 5 31 166 18 13 197

12 11 8 15 20 44 64 10 7 16 24 3 18 19 10 15 17 23 11 69 416 28 34 478

2 4 3 2 2 7 11 2 3 2 6 1 3 7 3 3 1 3 2 18 85 3 12 100

No geographic segments∗∗

Final sample 10 7 5 13 18 33 52 5 2 14 17 2 15 10 5 9 15 19 8 47 306 25 22 353

4 1 3 2 1

2 2 3 1 1 1 4 25

25

∗

These companies report geographic segments as their operating segments and do not provide any entity-wide geographic disclosures under IFRS 8. They are excluded from the sample. ∗∗ These companies do not disclose any geographic information and are excluded from the sample.

WEIGHT = 0, for geographic segments described as

analysis tests the significance of the change in the resulting measures under IAS 14R and IFRS 8 for each of the three approaches. The second measure averages the number of segments reported weighted by the level of aggregation represented by the segment. The resulting “average” fineness score (Average F) is then compared under IAS 14R and IFRS 8. The Average F score is calculated as follows:

Average F =

n 

“Other” or “Rest of World” 1, for geographic segments including multiple continents 2, for geographic segments representing a single continent or subset of a single country such as “European Union” or “Rest

Segment W EIGHT /n

of Europe”

i=1

3, for geographic segments representing a Where WEIGHT = 0, for geographic segments described as

single country

“Other” or “Rest of World” 1, for geographic segments including multiple continents 2, for geographic segments representing a single continent or subset of a single country such as “European Union” or “Rest of Europe” 3, for geographic segments representing a single country The third measure combines the number of segments reported and the level of aggregation represented by the segment, weighted by the percentage of revenues in the segment. The resulting “weighted” fineness score (Weighted F) is then compared under IAS 14R and IFRS 8. The Weighted F is calculated as follows:

W eighted F =

 n   SE GREVi x W EIGH Ti T OT ALREV

The larger the F score, the finer the geographic segment information provided by the company. The weights are consistent with the weighting system used by Doupnik and Seese (2001). The zero weight for “other” or “rest of world” indicates that these disclosures, used by most companies, provide no useful geographic risk information. The weights of 1, 2 and 3 indicate increasingly useful geographic risk assessment information with 3 being the most useful information at the country specific level.6 The Average F reflects the portion of total revenues disclosed by level of geographic aggregation. The greater the Average F, the more detailed the geographic information provided by the company. For example, Mobistar provides revenues for two countries, Belgium and Luxembourg. Since each of Mobistar’s geographic segments represents a single country, Mobistar’s Average F is 3.0. In contrast, Belgacom also discloses revenue for two geographic segments, Domestic (Belgium) and Other. Belgacom’s Average F is 1.5.

i=1

6 Doupnik and Seese (2001) used alternate weighting schemes, weighting country specific disclosures as 3, 4, and 8. The mean change in the fineness score from 1997 to 1998 was not significant when the country specific weight was 3. However, the mean change was significant using the country specific weight of 4 or 8.

Where SEGREV = revenue for geographic segment i TOTALREV = total revenue Please

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Table 2 Aggregation level of entity-wide geographic revenue disclosures under IAS 14R and IFRS 8. IAS 14R

IFRS 8

Level of aggregation

Level of aggregation

By country

Countries

Mixed

Domestic regions

Domestic other

Regions

None

Total

Countries

Mixed

Domestic regions

Domestic other

Regions

None

Total

Austria Belgium Czech Denmark Finland France Germany Greece Hungary Ireland Italy Luxembourg Netherlands Norway Poland Portugal Spain Sweden Switzerland United Kingdom European subtotal

2 2 2 1 2 2 2 2 1 5 1 1 3 2 1 3 1 1 2 2 38 12% 1 9 10 21% 48 13%

2 1 1 1 5 9 11 0 1 4 2 1 6 5 1 2 4 4 2 17 79 26% 8 8 16 34% 95 27%

3 0 2 3 8 12 27 2 0 0 9 0 2 1 0 1 7 5 1 11 94 30% 3 1 4 9% 98 28%

0 1 0 0 0 0 0 0 0 3 0 0 0 0 1 1 1 0 0 1 8 3% 2 0 2 4% 10 3%

2 3 0 7 3 10 10 0 0 2 4 0 4 1 0 2 2 8 3 12 73 24% 10 2 12 26% 85 24%

1 0 0 1 0 0 2 1 0 0 1 0 0 1 2 0 0 1 0 4 14 5% 1 2 3 6% 17 5%

10 7 5 13 18 33 52 5 2 14 17 2 15 10 5 9 15 19 8 47 306

3 3 2 4 1 3 3 3 1 7 2 1 4 2 1 2 2 6 2 12 64 21% 8 12 20 42% 84 24%

3 2 1 1 7 11 19 0 1 5 3 1 6 4 1 3 4 6 4 22 104 34% 6 7 13 28% 117 33%

2 1 2 4 9 15 25 2 0 2 8 0 3 2 0 1 7 3 1 6 93 30% 4 1 5 11% 98 28%

0 1 0 1 0 0 2 0 0 0 2 0 0 0 3 1 1 1 0 3 15 5% 3 0 3 6% 18 5%

2 0 0 3 1 4 3 0 0 0 2 0 2 2 0 2 1 2 1 4 29 10% 3 2 5 11% 34 10%

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 1 0% 1 0 1 2% 2 0%

10 7 5 13 18 33 52 5 2 14 17 2 15 10 5 9 15 19 8 47 306

Australia New Zealand AU/NZ subtotal Total

25 22 47 353

25 22 47 353

Countries: country specific disclosures including at least one country other than the country of domicile Mixed: mix of countries and regions with country specific disclosures for at least one country other than the country of domicile Domestic/Regions: country of domicile and regions Domestic/Other: country of domicile and other Regions: continent (including portions of a continent such as Western Europe) and multicontinent segments with no country disclosures

The Weighted F incorporates the percentage of total revenues disclosed at each level of geographic aggregation. This is accomplished by adjusting the geographic area weights by the ratio of segment revenues to total revenues. With the weighted measure, the fineness score increases as the percentage of total revenues disclosed by less aggregated geographic areas increases. Scores can range from just above zero (two segments, one segment and other, with the majority of revenues classified as other) to 3.0 (all revenues allocated to specific countries). For example, in 2009 Coloplast reports revenues for Denmark and other, with Denmark representing 2.5% of total revenues. Colorplast’s Weighted F is 0.075 ((2.5%∗ 3) + (97.5%∗ 0)). Results Level of geographic segment aggregation Table 2 provides the breakdown of the level of aggregation provided by the sample companies under IAS 14R and IFRS 8. Of the 353 sample companies, 18 (5%) disclose revenues for only the country of domicile (domestic/other) with no additional disaggregation under IFRS 8. Of the 18 companies reporting domestic/other under IFRS 8, the average percentage revenues for the country of domicile is 71% (ranging from 3% to 99%) with six companies reporting more than 90% of their revenues in the country of domicile. Using a 10% materiality threshold, these six companies could not have another material country to disclose. However, four companies report less than 50% of their revenues in the country of domicile, with Coloplast reporting 97% of their revenues outside Please

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the country of domicile. Thirty-four companies (10%) report revenues only by regions (no country of domicile or individual country information), a significant decrease from 85 companies (24%) under IAS 14R (t = 5.23, p < 0.01). The number of companies reporting country specific segments increases significantly from 48 (13%) under IAS 14R to 84 (24%) under IFRS 8 (t = 3.51, p < 0.01) and the number of companies reporting a mix of countries and regions increases significantly from 95 (27%) under IAS 14R to 117 (33%) under IFRS 8 (t = 1.80, p = 0.04). On average, companies reporting country specific information provide revenues for 4.86 countries, including the country of domicile. Of the 84 companies reporting country specific information, 35 (42%) provide information for only one country other than the country of domicile and 17 companies (20%) provide revenues for more than five additional countries (other than the country of domicile). The difference between the percentage of European (21%, 64 companies) and AU/NZ (42%, 20 companies) companies reporting by country is significant (t = 2.84, p < 0.01). The 117 companies reporting a mix of countries and regions under IFRS 8 report an average of 7.37 segments, with an average of 2.9 countries, excluding the country of domicile. Forty-five companies (38%) provide information for only one country other than the country of domicile and 20 companies (17%) provide revenues for more than five additional countries. The increase in companies reporting country specific and mixed segments indicates that the IFRS 8 requirement to disclosure material country revenues resulted in a significant number of companies reporting disaggregated revenues at the individual country level.

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S.J. Cereola et al. / Research in Accounting Regulation 000 (2017) 1–10 Table 3 Companies disclosing at least one individual country’s revenues other than country of domicile under IFRS 8 percentage of total revenues represented by smallest individual country reported. IAS 14R

IFRS 8

By country

<5%

5–10%

>10%

Total

<5%

5–10%

>10%

Total

Austria Belgium Czech Denmark Finland France Germany Greece Hungary Ireland Italy Luxembourg Netherlands Norway Poland Portugal Spain Sweden Switzerland United Kingdom European subtotal

0 1 1 0 5 4 8 1 0 3 1 1 5 5 2 4 3 2 1 4 51 43% 1 1 2 7% 53 36%

1 1 1 0 0 2 0 0 2 0 0 0 1 0 0 0 0 1 2 4 15 13% 3 2 5 19% 20 14%

3 1 1 2 2 5 4 1 0 7 2 1 3 2 0 1 2 3 1 11 52 44% 6 14 20 74% 74 50%

4 3 3 2 7 11 12 2 2 10 3 2 9 7 2 5 5 6 4 19 118

1 2 1 3 3 4 7 2 0 0 2 1 7 3 2 3 4 6 2 12 65 39% 5 4 9 27% 74 37%

1 1 0 0 1 3 4 0 0 4 0 1 1 2 0 0 0 3 1 10 32 19% 2 3 5 15% 37 18%

4 2 2 2 4 7 8 1 2 8 3 0 2 2 0 2 2 4 3 13 71 42% 8 11 19 58% 90 45%

6 5 3 5 8 14 19 3 2 12 5 2 10 7 2 5 6 13 6 35 168

Australia New Zealand AU/NZ subtotal Total

10 17 27 147

15 18 33 201∗

∗ t-test, increase in number of companies providing individual country sales (other than country of domicile), significant at p < 0.0 0 01 (t = 4.11); Mann Whiney U test significant at p = 0.0 0 02 (z = 3.57)

IFRS 8 requires only country of domicile and material country segment disclosures. Ninety-eight companies (28%) provide geographic segment revenues at either the continent or multicontinent level in addition to country of domicile revenues (see Table 2, Domestic/Regions column). Since it is assumed that these companies do not have material revenues for individual countries, they are voluntarily providing disclosures that are not required under IFRS 8.

Individual country and country of domicile materiality thresholds By evaluating the individual country disclosures (other than country of domicile), the study can determine an upper bound on the company’s materiality threshold. Table 3 provides summary information for the 201 companies providing country specific disclosures (84 companies) or mixed country and region disclosures (117 companies) under IFRS 8. The study classifies the disclosures into three groups based on the percentage of total revenues for the “smallest” country (not including the country of domicile). The three groups are (1) less than 5% of total revenues, (2) between 5% and 10% of total revenues, and (3) greater than 10% of total revenues. Table 3 shows that after the adoption of IFRS 8, 74 (37% of 201) companies disclose individual country revenues representing less than 5% of total revenues with 40 companies disclosing revenues for at least one country equal to less than 2% of total revenues. This indicates that these companies use a materiality level of less than 5%. Thirty-seven (37) companies (18%) disclose revenues for the smallest country between 5% and 10% of total revenues indicating either a materiality level between 5% and 10% or the company did not have an individual country with revenues less than this range. The remaining 90 companies (45%) report revenues for the smallest country at greater than 10% of total revenues. Please

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Fifty-five (55) percent of the European companies (168 out of 306) and 70% of the AU/NZ companies (33 out of 47) report revenues for at least one country other than the country of domicile under IFRS 8. The percentage of AU/NZ companies reporting revenues for a non-domicile country is significantly greater than the European percentage (t = 2.09, p = 0.04). Australian companies identify the United States most frequently (9 of 15 companies) and every New Zealand company separately discloses revenues for Australia (18 out of 18). For European companies, the United States is the most frequently disclosed country (84), followed by the United Kingdom (46), Germany (41), France (36), and China (29). Table 4 provides additional information for each materiality threshold group from Table 3. The results show that the percentage of total revenues disclosed by individual country under IFRS 8 is similar across all three threshold groups ranging from 36.7% to 38.3%. A larger percentage of companies in the two lower threshold groups report revenues for more than one country (84% each) than the companies in the greater than 10% threshold group (24%). Further evaluation of the relationship between the materiality threshold and the number of countries reported finds a negative correlation of –0.4176 (p < 0.001) between the percentage of revenues in the smallest country and the number of countries reported. This provides evidence that as management’s materiality threshold increases, the number of material countries reported decreases. The materiality results are similar to Doupnik and Seese’s (2001) materiality results for the adoption of SFAS 131. Both studies find that more than half of the companies disclosing individual countries report an individual country with revenues less than the 10% threshold and the average number of individual countries disclosed is greater for the two lower threshold groups. The similarity in findings suggests that for some companies, management believes there are benefits associated with disclosing individual country information including signaling

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Table 4 Companies disclosing at least one individual country’s revenues other than country of domicile under IFRS 8 number of companies, average number of individual countries disclosed (other than country of domicile), percentage of total revenues by individual country and number of countries reported, by materiality threshold. Materiality threshold

Number of countries reported

% of Revenues in smallest country

Number of companies

Average number of countries disclosed

% of Total revenues by individual country

1

<5% 5% to 10% >10% Total

74 37 90 201

4.8 2.7 1.3 2.8

38.3% 36.7% 37.1% 38.2%

12 6 68 86

>1 62 (84%) 31 (84%) 22 (24%) 115 (57%)

Table 5 Comparison of percentage of total revenues represented by country of domicile under IAS 14R and IFRS 8 Companies disclosing revenues by country of domicile. IAS 14R

IFRS 8

By country

<5%

5–10%

>10%

Total

<5%

5–10%

>10%

Total

Austria Belgium Czech Denmark Finland France Germany Greece Hungary Ireland Italy Luxembourg Netherlands Norway Poland Portugal Spain Sweden Switzerland United Kingdom European subtotal

1 0 0 3 0 1 1 0 0 0 0 0 2 1 0 0 0 5 3 2 19 10% 0 0 0 0% 19 8%

1 0 0 0 4 1 0 0 0 2 0 0 2 1 0 0 0 0 0 4 15 8% 0 0 0 0% 15 7%

5 3 4 1 11 19 39 4 2 8 12 0 5 6 3 7 12 4 2 16 163 82% 11 17 28 100% 191 85%

7 3 4 4 15 21 40 4 2 10 12 0 9 8 3 7 12 9 5 22 197

3 2 0 6 2 2 1 0 0 2 0 0 3 1 0 0 0 7 3 6 38 15% 1 1 2 5% 40 14%

0 0 0 1 5 2 2 0 0 2 0 0 2 2 0 0 0 1 0 7 24 9% 0 1 1 3% 25 8%

5 5 4 2 9 24 46 5 2 9 14 0 6 5 5 6 13 6 4 22 192 76% 16 18 34 92% 226 78%

8 7 4 9 16 28 49 5 2 13 14 0 11 8 5 6 13 14 7 35 254

Australia New Zealand AU/NZ subtotal Total

11 17 28 225

17 20 37 291∗

∗ t-test, increase in number of companies providing country of domicile sales significant at p < 0.0 0 01 (t = 5.72); Mann Whiney U test significant at p = <.0 0 01 (z = 4.30)

international diversification and/or signaling low international risk (Cai & Warnock, 2012; Doupnik & Seese, 2001, Hope, Kang, Thomas, & Vasvari, 2009). Table 5 shows that the number of companies disclosing country of domicile revenues increases significantly from 225 under IAS 14R to 291 under IFRS 8 (t = 5.72, p < 0.001), reflecting the IFRS 8 requirement to disclose country of domicile. The country of domicile revenue percentage ranges from 0.16% to 99.05% with a mean of 33.11% and a median of 24.69%. Eighty-three (83) percent of the European companies (254 out of 306) and 79% of the AU/NZ companies (37 out of 47) disclose revenues for the country of domicile. The difference between the two groups is not significant. Additional analysis finds that an average of 30.9% of European company revenues and an average of 48.2% of AU/NZ company revenues are generated in the country of domicile. This difference is significant (t = 3.11, p < 0.01). Fineness measures To evaluate the impact of IFRS 8 on the fineness of geographic data disclosures, the study computes two fineness scores, the Average F and the Weighted F. Table 6 summarizes the fineness scores Please

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for all 353 companies. The first two columns include the average number of geographic segments reported under IAS 14R and IFRS 8. The average increases significantly from 4.93 to 5.42 segments (t = 2.07, p = 0.02). Of the 353 companies, 206 companies (58%) report the same number of geographic segments under IFRS 8 and IAS14R; 114 companies (32%) report a greater number of segments; and 33 companies (10%) report fewer segments under IFRS 8 than under IAS 14R. The Average F equals the average of the total segment aggregation weights. The increase in the Average F score for all companies from 1.82 under IAS 14R to 1.99 under IFRS 8 is significant (t = 3.99, p < 0.001). The Weighted F equals the sum of the segment’s level of aggregation weighted by the percentage of revenues in the segment. The increase in the Weighted F score for all companies from 2.03 under IAS 14R to 2.15 under IFRS 8 is significant (t = 2.51, p = 0.005). The significant increase in both the Average F and the Weighted F for the entire sample indicates that the adoption of IFRS 8 improved the fineness of company’s geographic disclosures. A separate analysis of the European companies finds a significant increase in the average number of segments, the Average F, and the Weighted F after adopting IFRS 8 (t = 1.95, p = 0.03; segment

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and fineness by European, Australian and New Zealand blue chip companies, Research in Accounting Regulation (2017), https://doi.org/10.1016/j.racreg.2017.09.003

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Table 6 Comparison of number of geographic segments reported and fineness scores under IAS 14R and IFRS 8 companies with entity-wide geographic disclosures by country. Panel A: Comparison by country By country

Average number of segments IAS 14R

Average number of segments IFRS 8

Average fineness score IAS 14R

Average fineness score IFRS 8

Weighted fineness score IAS 14R

Weighted fineness score IFRS 8

Number of companies

Austria Belgium Czech Denmark Finland France Germany Greece Hungary Ireland Italy Luxembourg Netherlands Norway Poland Portugal Spain Sweden Switzerland United Kingdom European subtotal Australia New Zealand AU/NZ subtotal Total

4.60 3.43 3.40 3.77 6.89 5.30 5.04 3.40 4.00 3.14 5.06 11.50 5.73 8.10 4.20 6.67 5.20 5.05 6.00 4.53

5.60 5.29 3.40 4.46 6.56 5.48 5.06 4.20 3.50 4.00 5.35 11.50 6.40 7.80 4.80 5.89 5.40 6.79 6.75 5.55

1.69 1.85 2.23 1.49 1.86 1.72 1.75 1.75 2.40 2.08 1.61 2.56 1.92 1.93 1.36 2.09 1.88 1.69 1.89 1.61

1.99 2.22 2.02 1.85 1.88 1.84 1.86 2.11 2.13 2.17 1.68 2.59 2.03 2.01 1.76 2.00 1.92 1.93 2.12 2.04

1.89 2.24 2.63 1.68 2.21 1.91 1.95 1.82 2.40 2.29 1.86 2.54 2.04 1.99 1.47 2.34 2.35 1.78 1.95 1.84

2.13 2.32 2.42 1.57 2.10 1.98 2.04 2.16 2.38 2.24 2.01 2.53 2.19 2.24 2.58 2.32 2.28 1.77 2.15 2.17

10 7 5 13 18 33 52 5 2 14 17 2 15 10 5 9 15 19 8 47

5.20

5.72

1.77

1.95

1.98

2.10

306

3.12 3.23 3.17 4.93

3.40 4.09 3.72 5.42

2.04 2.25 2.14 1.82

2.09 2.44 2.26 1.99

2.24 2.49 2.36 2.03

2.39 2.69 2.53 2.15

25 22 47 353

Panel B: Tests for significance of increases in segments and fineness scores (significance determined using one-tailed test) t-test for overall increase in average number of segments (Mann Whiney U test for Total significant at p = 0.002 (z = 3.11) t-test for overall increase in average fineness score (Mann Whiney U test for Total significant at p = 0.001 (z = 3.72) t-test for overall increase in weighted fineness score (Mann Whiney U test for Total significant at p = 0.02 (z = 1.98)

t = 4.26, p < 0.001; t = 2.39, p = 0.01, respectively). These results are consistent with the results for the entire sample. A separate analysis of the AU/NZ companies indicates a significant increase in the average number of segments and the Weighted F (t = 1.58, p = 0.06; t = 1.28, p = 0.10, respectively) but the increase in the Average F is not significant. This result suggests that although the change in the composition of the segments is not significant, the percentage of revenues represented by less aggregated categories (countries and single continent) increased. Additional analysis of the European and AU/NZ companies finds a significant difference between the two regions for all three measures under IFRS 8. The difference in the average segments (5.72 for Europe and 3.72 for AU/NZ) is significant at p < 0.001 (t = 6.12). The difference in the Average F (1.95 for Europe and 2.26 for AU/NZ) and Weighted F (2.10 for Europe and 2.53 for AU/NZ) are both significant at p < 0.01 (t = 3.20 and t = 4.84, respectively). These results suggest that although the European companies report more segments, the AU/NZ disclosures are at a greater level of disaggregation than the European companies. This is consistent with the significant difference between the percentage of AU/NZ (70%) and European (55%) companies reporting individual country information (Table 3). This study uses Doupnik and Seese’s (2001) methodology for the Average F score. Their study of the effect of adopting SFAS 131 on the fineness of geographic information finds no significant in-

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European subtotal t = 1.95

AU/NZ subtotal t = 1.58

Total t = 2.07

p = 0.03 t = 4.26

p = 0.06 t = 0.84

p = 0.02 t = 3.99

p < 0.001 t = 2.39

p > 0.10 t = 1.28

p < 0.001 t = 2.51

p = 0.01

p = 0.10

p = 0.005

crease in the F score using the country specific weight of 3. However, they find a significant increase in the F score using a weight of 4 or 8 for country specific information. They conclude that the improvement in geographical fineness after adopting SFAS 131 depends upon the weight assigned to country level disclosures. In contrast, this study finds a significant increase in the Average and Weighted F with the adoption of IFRS 8 using the country specific weight of 3 (Table 6) suggesting a greater improvement in fineness from the adoption of IFRS 8 by European and AU/NZ companies than the adoption of SFAS 131 by US companies.7 Analysis by level of aggregation For additional analysis, companies are divided into five groups based on the geographic segment aggregation level used under IFRS 8: 1. Companies providing disclosure by individual country, in addition to country of domicile (n = 84) 2. Companies providing a mix of country and continent or multicontinent disclosures (n = 117) 7 Testing the sensitivity of this study’s findings by increasing the weight of county level data to 4 and 8 finds significant increases at p<0.001 for the Average F and Weighted F using both alternative weights. Since the results using the original weight of 3 are significant, the results using the alternative weights are not reported.

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Table 7 Comparison of number of geographic segments reported and fineness scores under IAS 14R and IFRS 8 Companies with entity-wide geographic disclosures By type of disclosure. By type of disclosure

Average number of segments IAS 14R

Average number of segments IFRS 8

Average Fineness Score IAS 14R

Average Fineness Score IFRS 8

Weighted Fineness Score IAS 14R

Weighted Fineness Score IFRS 8

All companies Increase Decrease No change Disclosure by country Increase Decrease No change Disclosure by mix of countries/regions Increase Decrease No change Disclosure by domestic/regions Increase Decrease No change Disclosure by domestic/other Increase Decrease No change Disclosure by regions Increase Decrease No change None Decrease

4.93

5.42∗∗ 114 33 206 4.86∗∗ 30 13 41 7.37∗∗ 51 8 58 4.88# 22 4 72 2.00 7 4 7 4.00 3 2 29 1.00 2

1.82

1.99∗∗∗ 123 53 177 2.44∗∗∗ 40 14 30 2.17∗∗∗ 51 13 53 1.72# 20 15 63 1.50 8 4 6 1.45 4 5 25 0.00 2

2.03

2.15∗∗∗ 179 161 13 2.36∗∗ 40 35 9 2.32∗∗ 77 40 0 2.00# 40 57 1 2.12 9 9 0 1.73 13 18 3 0.00 2

4.18

6.41

4.65

2.06

3.97

5.00

2.07

2.00

1.66

1.02

1.44

1.74

2.15

2.20

1.95

1.37

1.72

2.25

Number of companies

353

84

117

98

18

34

2

∗

difference between IAS 14R and IFRS 8 significant at p < 0.10 Mann-Whitney U test results (not reported) are similar to the t-test results. ∗∗∗ difference between IAS 14R and IFRS 8 significant at p < 0.01 ∗∗ difference between IAS 14R and IFRS 8 significant at p < 0.05 # difference between IAS 14R and IFRS 8 not significant at p < 0.10

3. Companies providing disclosure by country of domicile and regions (n = 98) 4. Companies providing disclosure by country of domicile and other (n = 18) 5. Companies providing disclosure by regions, not disclosing country of domicile (n = 34) Table 7 includes the average number of segments disclosed, the Average F scores, and the Weighted F scores for these five groups. Table 7 shows significant increases in all three measures (average number of segments, Average F and Weighted F) for companies disclosing individual country information and companies disclosing a mix of countries and regions. This result indicates that these companies report a greater percentage of total revenues in less aggregated segments after the adoption of IFRS 8, significantly improving the fineness of the geographic disclosures. Doupnik and Seese (2001) also find significant increases in the average number of segments and the F score for companies disclosing individual countries and a mix of countries and regions. The consistency of findings for these two subsets of companies suggests that the requirement to provide country of domicile and other material country disclosures under both SFAS 131 and IFRS 8 resulted in a finer set of geographic disclosures than provided under the prior standard. Summary and conclusions This research study investigates the change in the reporting of entity-wide geographic segments with the adoption of IFRS 8 by European and AU/NZ blue chip companies. The study focuses on the change in the fineness of the geographic segments disclosed Please

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and the materiality of the individual country and country of domicile disclosures. The analysis finds a significant decrease in the number of companies reporting only broad geographic regions and a significant increase in the number of companies reporting country specific segments and a mix of countries and regions after the adoption of IFRS 8. The increase in companies reporting country specific and mixed segments indicates that the requirement to disclose country of domicile and material country data under IFRS 8 resulted in a significant number of companies reporting disaggregated revenues at the individual country level. To the extent country specific information is more useful, financial analysts and the IASB should welcome this result. The significant increase in all three fineness measures (average number of segments, Average F and Weighted F) also indicates an improvement in the level of disaggregation of geographic information disclosed under IFRS 8. When the fineness measures are analyzed by disclosure type (countries, mixed, etc.), the results show significant increases in all three measures for disclosure by country and mixed segments. Overall, the evidence finds an improvement in the fineness of the geographic information disclosed after the adoption of IFRS 8 that should be useful to investors analyzing international risk. The analysis finds that 55% of the companies disclosing individual country revenues for a least one country other than the country of domicile report revenues of less than 10% of total revenues suggesting that management uses a materiality threshold of less than 10% for determining a material country. The study also finds that the lower the materiality threshold, the greater the number of individual countries disclosed suggesting that in some cases management believes the company benefits from disclosing country specific data at lower threshold levels. However, only 57% (201 out segment

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of 353) of the sample disclose country information other than the country of domicile. These mixed results imply that management may be interpreting the vague wording of “material” to either disclose or conceal information about specific countries, depending on management’s view of the benefit or detriment to the company. Without clear guidance for identifying material countries, investors desire for information that distinguishes between different regions in a way that is useful may not be met (IASB, 2013). Therefore, the IASB should consider either requiring management to disclosure the level of materiality used to determine material countries or prescribing a specific level of materiality that must be used (see ESMA, 2011 and Franzen & Weiβ enberger, 2015). IFRS 8 provides a broad exemption from entity-wide geographic disclosures when “the necessary information is not available and the cost to develop it would be excessive” (IASB 2006, para. 33). The IASB should also consider requiring companies that use this exemption to disclosure that information. This study focuses on the changes in entity-wide geographic segment disclosures with the adoption of IFRS 8. Building on the work of Leung and Verriest (2015), future research should investigate whether the change in fineness of the geographic information results in a change in the usefulness of such disclosures. This research investigates changes in the year of adoption. As companies adjust to comply with the new standard, their disclosures may change over time. Therefore, future research should include longitudinal studies extending beyond the year of adoption to evaluate the sustained disclosure of country specific data and whether it meets investor needs. This research sample includes the largest European and AU/NZ companies that are subject to substantial regulatory oversight and audited by the largest international accounting firms. This limits the generalizability of the results. Accordingly, future research should expand the analysis to smaller companies from the sample countries and companies using IFRS in other regions of the world. References Aleksanyan, M., & Danbolt, J. (2015). Segment reporting: Is IFRS 8 really better? Accounting in Europe, 12(1), 37–60. Andre, P., Filip, A., & Moldovan, R. (2016). Segment disclosure quantity and quality under IFRS 8: Determinants and the effect on financial analysts’ earnings forecast errors. The International Journal of Accounting, 51(4), 443–461. AIMR. (1992). Financial reporting in the 1990s and beyond: A position paper of the association for investment management research. Charlottesville, VA: AIMR. Behn, B. K., Nichols, N. B., & Street, D. L. (2002). The predictive ability of geographic segment disclosures by U.S. companies: SFAS no. 131 vs. SFAS no. 14. Journal of International Accounting Research, 1, 31–44.

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Cai, F., & Warnock, F. (2012). Foreign exposure through domestic equities. Finance Research Letters, 9(1), 8–20. Crawford, L., Extance, H., Helliar, C., & Power, D. (2012). Operating segments: The usefulness of IFRS 8. Edinburgh: ICAS. Doupnik, T. S., & Seese, L. P. (2001). Geographic area disclosures under SFAS 131: Materiality and fineness. Journal of International Accounting, Auditing & Taxation, 10, 117–138. ESMA. (2011). Review of European enforcers on the implementation of IFRS 8 – operating segments. Paris: European Securities and Markets Authority. FASB. (1997). Statement of financial accounting standards No. 131, disclosures about segments of an enterprise and related information. Norwalk, CT: FASB. Franzen, N., & Weiβ enberger, B. E. (2015). The adoption of IFRS 8 – no headway made? Evidence from segment reporting practices in Germany. Journal of Applied Accounting Research, 16(1), 88–113. He, L., Evans, E., & He, R. (2016). The impact of AASB 8 operating segments on analysts’ earnings forecasts: Australian evidence. Australian Accounting Review, 26, 330–340. Hope, O. K., Kang, T., Thomas, W., & Vasvari, F. (2009). The effects of SFAS 131 geographic segment disclosures by US multinational companies on the valuation of foreign earnings. Journal of International Business Studies, 40(3), 421–443. Hope, O-K., & Thomas, W. (2008). Managerial empire building and firm disclosure. Journal of Accounting Research, 46(3), 591–626. Hope, O-K., Kang, T., Thomas, W., & Vasvari, F. (2008). Pricing and mispricing effects of SFAS 131. Journal of Business Finance and Accounting, 35(3/4), 281–306. Hope, O. K., Thomas, W., & Winterbotham, G. (2006). The impact of nondisclosure of geographic segment earnings on earnings predictability. Journal of Accounting, Auditing & Finance, 21(3), 323–346. IASB. (2006). International financial reporting standard 8, operating segments. London, U.K.: IFRS Foundation. IASB. (2013). Post-implementation Review: IFRS 8 operating segments. London, U.K.: IFRS Foundation. IASB. (2017). Exposure draft (ED/2017/2): Improvements to IFRS 8 operating segments. London, U.K.: IFRS Foundation. IASC. (1997). IAS 14R, segment reporting. London, U.K.: IASC. Kajüter, P., & Nienhaus, M. (2017). The impact of IFRS 8 adoption on the usefulness of segment reports. Abacus, 53, 28–58. Kang, H., & Gray, S. J. (2013). Segment reporting practices in Australia: Has IFRS 8 made a difference? Australian Accounting Review, 23, 232–243. Leung, E., & Verriest, A. (2015). The impact of IFRS 8 on geographical segment information. Journal of Business Finance & Accounting, 42, 273–309. Moehrle, S. R., Mohrman, M. B., Reynolds-Moehrle, J. A., & Stuerke, P. (2009). Developments in accounting regulation: A synthesis and annotated bibliography of evidence and commentary in the academic literature (1999-20 0 0). Research in Accounting Regulation, 21(2), 125–137. Nichols, N. B., Bishop, A. C., & Street, D. L. (2002). Segment disclosures under IFRS 131: Impact on the banking industry. Research in Accounting Regulation, 15, 3–38. Nichols, N. B., Street, D. L., & Cereola, S. J. (2012). An analysis of the impact of adopting IFRS 8 on the segment disclosures of European blue chip companies. Journal of International Accounting Auditing & Taxation, 21(2), 79–105. Nichols, N. B., Street, D. L., & Gray, S. J. (20 0 0). Geographic segment disclosures in the United States: Reporting practices enter a new era. Journal of International Accounting Auditing & Taxation, 9(1), 59–82. Nichols, N. B., Street, D. L., & Tarca, A. (2013). Segment reporting under the IFRS 8 and SFAS 131 management approach: A research review. Journal of International Financial Management & Accounting, 24(3), 261–312. Wang, Q., & Ettredge, M. (2015). Discretionary allocation of corporate income to segments. Research in Accounting Regulation, 27(1), 1–13.

segment

disclosures

under

IFRS

8:

Changes

in

materiality

and fineness by European, Australian and New Zealand blue chip companies, Research in Accounting Regulation (2017), https://doi.org/10.1016/j.racreg.2017.09.003