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The effects of SFAS 131 geographic segment disclosures on the valuation of foreign earnings


Journal of International Business Studies



Authors / Editors

Hope O K;Kang T;Thomas W B;Vasvari F


Publication Year



Foreign operations are becoming increasingly important for US companies. We investigate whether the market's valuation of foreign earnings is a function of the firm's geographic segment disclosures. Specifically, we examine the effects of an increase in the number of geographic segments disclosed and the inclusion of earnings measures in geographic segment disclosures following the adoption of SFAS 131. We find strong evidence that our proxies for increased disclosure are positively associated with the valuation of foreign earnings. Our results are robust to a number of sensitivity analyses. Taken together, our results suggest that the pricing of foreign earnings is associated with important aspects of the firm's information environment.


Foreign earnings; SFAS 131; Geographic segment disclosures; Valuation

Available on ECCH


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