Author ORCID Identifier:

https://orcid.org/0009-0004-7944-8103

Date of Graduation

8-2025

Document Type

Dissertation

Degree Name

Doctor of Philosophy in Business Administration (PhD)

Degree Level

Graduate

Department

Accounting

Advisor/Mentor

Cassell, Cory

Committee Member

Raymundo, Fellipe

Second Committee Member

Wiebe, Zac

Keywords

Disclosure Quality; Financial Reporting; Segment Disclosures; Segment Reporting

Abstract

Investors have recently indicated that disclosed descriptions of segment profit/loss measures are useful, but insufficient. Clear and detailed descriptions are essential for helping investors understand the segment profit/loss measure employed, especially since these measures may not align with measures from the consolidated income statement under the “management approach.” To better understand investors’ concerns, I hand-collect data from segment profit/loss disclosures and develop a measure that captures a dimension of disclosure quality specific to this setting: the extent to which segment profit/loss disclosures effectively describe the segment profit/loss measure employed. The measure considers the level of detail provided and the ease with which users can determine the components of segment profit/loss. I find substantial variation in segment profit/loss disclosure quality across firms. The results of multivariate analysis suggest that segment profit/loss disclosure quality is driven by firm fundamentals and other characteristics of firms’ segment disclosures. Inconsistent with prior literature examining the extent of disaggregation into reportable segments, I find no evidence that proprietary or agency costs influence segment profit/loss disclosure quality. This suggests that more precise descriptions of the segment profit/loss measure employed do not carry the same risk of revealing proprietary information and agency problems. Finally, I find a substitute effect between mandatory and certain voluntary segment profit/loss disclosure decisions. This descriptive study presents baseline evidence on segment profit/loss disclosures across mandatory and voluntary disclosure frameworks that may be relevant to academics, financial statement users, and standard setters.

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