| This thesis investigates SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information, effective for all fiscal years commencing after December 15th, 1997.; First, using the spread and stock return volatility tests, I examine the effect of implementation of SFAS No. 131 by assessing the effect of interim period segment information disclosure on companies' information asymmetries. The empirical results provide evidence that segment information disclosure has a mitigating effect on information asymmetry.; I also test the effect of the interim segment disclosure on the cost of capital. Unlike the spread and volatility tests, I find no difference between nonvoluntary and voluntary disclosers either before or after the adoption of SFAS No. 131. Assuming nonvoluntary interim segment disclosers as higher proprietary cost firms, I investigate whether those firms lose competitive advantage. The results show that interim segment information disclosure affects those firms' abnormal profits.; Second, using Beaver's information content measures and analysts' earnings forecast properties, I study the market's reaction to interim financial statements. The empirical results of the information content tests show that the adoption of SFAS No. 131 does not affect the investor's price and volume reaction. These results give evidence that the information content of the new requirements of interim financial reporting is not significantly different from that under the previous requirements.; In addition, I investigate whether the interim period segment disclosure affects analysts' earnings forecast. I find that both before and after adoption of SFAS No. 131, analysts' annual and quarterly earnings forecasts for nonvoluntary disclosers have less dispersion and error, and the differences between the two disclosers are statistically significant.; This dissertation examines the effect of the disclosure frequency change, another element of an overall disclosure. This study provides insights into the effect of interim segment reporting requirements under SFAS No. 131 and to my knowledge, this is the first study that empirically investigates the effect of interim segment reporting under SFAS No. 131. |
