THE IMPACT OF STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NUMBER 14 ON THE OPERATING RISK OF MULTISEGMENT FIRMS

Persistent Link:
http://hdl.handle.net/10150/282046
Title:
THE IMPACT OF STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NUMBER 14 ON THE OPERATING RISK OF MULTISEGMENT FIRMS
Author:
Mboya, Fratern Michael
Issue Date:
1981
Publisher:
The University of Arizona.
Rights:
Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.
Abstract:
The objective of this dissertation is to investigate the effect of the segmental disclosure required by Statement of Financial Accounting Standards No. 14 (SFAS 14) on the operating risk of multisegment firms. This investigation is accomplished in two phases. A theoretical model establishing the relationship between segmental disclosure and operating risk is developed in phase one. In the second phase, this model is employed in an empirical study that evaluates the effect of SFAS 14 on the operating risk of the affected firms. The findings of each of these phases are summarized below. A theoretical model for measuring operating risk is developed first. This model is developed by decomposing systematic risk into operating and financial risks. Then it is shown how the additional segmental disclosure provided by SFAS 14 can be used to assess the value of this measure of operating risk. First, the determinants of operating risk are identified. Then it is argued that if the additional disclosure provided by SFAS 14 had an effect on the assessment of operating risk, this effect would be associated with the disclosure of segmental assets. This argument provides the basis for conducting an empirical study that evaluates the effect of the segmental disclosure provided by SFAS 14 on operating risk. In this dissertation, the empirical study examines the effect of disclosure of segmental assets on the operating risk of firms that disclosed such information for the first time following the initiation of SFAS 14. A sample of these firms form the treatment group. The control group is composed of single-segment firms. The firms in the control group did not disclose segmental assets prior to or after SFAS 14 went into effect. A control group composed of multisegment firms is not used in this study because only two firms are available from the sample taken. Two hypotheses are tested. Hypothesis 1 simply tests whether SFAS 14 had an effect on the operating risk of the affected firms. Hypothesis 2 then tests if SFAS 14 had a favorable effect on operating risk. The effect on operating risk is evaluated by comparing changes in operating risk from pre-regulation period to post-regulation period for the treatment group with those of the control group. In both hypotheses, the null hypothesis that SFAS 14 did not affect operating risk is tested. The Mann-Whitney U test is employed to test Hypothesis 1. The Mann-Whitney U test, the Wilcoxon Matched-Pairs Signed-Ranks Test and multiple regression analysis are used to test Hypothesis 2. The empirical results indicate that neither of the null hypotheses could be rejected at any conventional level of significance. In short, the empirical results tend to suggest that the additional segmental disclosure provided by SFAS 14 did not have a favorable effect on the operating risk of the affected firms. However it is advised that caution should be exercised in drawing inferences based on these results because of the potential effects on operating risk by factors not controlled for in this study. Finally, an alternative future study is suggested. Pending the empirical findings of the future study it is suggested that the empirical results presented in this study should be considered preliminary.
Type:
text; Dissertation-Reproduction (electronic)
Keywords:
Disclosure in accounting.; Financial statements.; Accounting.
Degree Name:
Ph.D.
Degree Level:
doctoral
Degree Program:
Graduate College; Business Administration
Degree Grantor:
University of Arizona
Advisor:
Dhaliwal, Dan S.

Full metadata record

DC FieldValue Language
dc.language.isoen_USen_US
dc.titleTHE IMPACT OF STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NUMBER 14 ON THE OPERATING RISK OF MULTISEGMENT FIRMSen_US
dc.creatorMboya, Fratern Michaelen_US
dc.contributor.authorMboya, Fratern Michaelen_US
dc.date.issued1981en_US
dc.publisherThe University of Arizona.en_US
dc.rightsCopyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.en_US
dc.description.abstractThe objective of this dissertation is to investigate the effect of the segmental disclosure required by Statement of Financial Accounting Standards No. 14 (SFAS 14) on the operating risk of multisegment firms. This investigation is accomplished in two phases. A theoretical model establishing the relationship between segmental disclosure and operating risk is developed in phase one. In the second phase, this model is employed in an empirical study that evaluates the effect of SFAS 14 on the operating risk of the affected firms. The findings of each of these phases are summarized below. A theoretical model for measuring operating risk is developed first. This model is developed by decomposing systematic risk into operating and financial risks. Then it is shown how the additional segmental disclosure provided by SFAS 14 can be used to assess the value of this measure of operating risk. First, the determinants of operating risk are identified. Then it is argued that if the additional disclosure provided by SFAS 14 had an effect on the assessment of operating risk, this effect would be associated with the disclosure of segmental assets. This argument provides the basis for conducting an empirical study that evaluates the effect of the segmental disclosure provided by SFAS 14 on operating risk. In this dissertation, the empirical study examines the effect of disclosure of segmental assets on the operating risk of firms that disclosed such information for the first time following the initiation of SFAS 14. A sample of these firms form the treatment group. The control group is composed of single-segment firms. The firms in the control group did not disclose segmental assets prior to or after SFAS 14 went into effect. A control group composed of multisegment firms is not used in this study because only two firms are available from the sample taken. Two hypotheses are tested. Hypothesis 1 simply tests whether SFAS 14 had an effect on the operating risk of the affected firms. Hypothesis 2 then tests if SFAS 14 had a favorable effect on operating risk. The effect on operating risk is evaluated by comparing changes in operating risk from pre-regulation period to post-regulation period for the treatment group with those of the control group. In both hypotheses, the null hypothesis that SFAS 14 did not affect operating risk is tested. The Mann-Whitney U test is employed to test Hypothesis 1. The Mann-Whitney U test, the Wilcoxon Matched-Pairs Signed-Ranks Test and multiple regression analysis are used to test Hypothesis 2. The empirical results indicate that neither of the null hypotheses could be rejected at any conventional level of significance. In short, the empirical results tend to suggest that the additional segmental disclosure provided by SFAS 14 did not have a favorable effect on the operating risk of the affected firms. However it is advised that caution should be exercised in drawing inferences based on these results because of the potential effects on operating risk by factors not controlled for in this study. Finally, an alternative future study is suggested. Pending the empirical findings of the future study it is suggested that the empirical results presented in this study should be considered preliminary.en_US
dc.typetexten_US
dc.typeDissertation-Reproduction (electronic)en_US
dc.subjectDisclosure in accounting.en_US
dc.subjectFinancial statements.en_US
dc.subjectAccounting.en_US
thesis.degree.namePh.D.en_US
thesis.degree.leveldoctoralen_US
thesis.degree.disciplineGraduate Collegeen_US
thesis.degree.disciplineBusiness Administrationen_US
thesis.degree.grantorUniversity of Arizonaen_US
dc.contributor.advisorDhaliwal, Dan S.en_US
dc.identifier.proquest8203739en_US
dc.identifier.oclc8435408en_US
dc.identifier.bibrecord.b23488992en_US
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