Keywords: multi-segment firm; disaggregated information; line items; information processing; return predictability; analyst forecast.
JEL Codes: G10, G12, G14
학회소식
[2022년 5차 CAFM2022]Information Diffusion into Multi-(Secretive)-Segment Firms
작성자 : 관리자
조회수 : 2136
게시일 :
2022-12-20
Firms have substantial freedom of choice about whether to disclose essential financial statement line items (e.g., total assets) for their business segments. Counting the number of line items that a firm discloses for its segments presents both a simple measure and a new angle for capturing the secretiveness of multi-segment firms. We show that multi-segment firms keep value-relevant line items about their segments secret with significant frequency and magnitude. Consistent with the proprietary costs of disclosure, innovative firms are even more secretive. As an explanation of the delay in a multi-segment firm’s stock price updates, segment-level financial secretiveness outperforms firmwide disclosures. When a firm offers only a few line items about a segment, analysts and markets are slow to impound the relevant industry information into the firm’s value. A trading strategy that exploits this secretive segment effect yields a return of 9.6% per year. Operational diversity alone does not impede information diffusion once multi-segment firms are transparent about their segment financials.
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