Seminar (Dept. of Accounting)

Theme：The Joint Impact of Enhanced Comparability and Transparency in Segment Reporting on Managers’ Resource Allocation Decisions

Speaker：Ying (Elaine) Wang, Professor, The University of Massachusetts Amherst

Time：2022-03-25 09:30

Address：Online Meeting

Language：Chinese/English

ABSTRACT:

In light of the FASB’s ongoing project to improve segment disclosure requirements (FASB 2021), we examine whether and how enhanced segment-level comparability and transparency jointly influence managers’ resource allocation decisions across different operating segments. We find that enhanced segment comparability can cause managers to make resource allocation decisions that focus on segment-level goals rather than maximizing firm-level profitability. Importantly, this comparability effect is primarily driven by managers who are inherently more (compared to less) competitor-oriented. Furthermore, a requirement to provide additional segment disclosures (as proposed by the FASB to improve reporting transparency) does not mitigate the comparability effect for more competitor-oriented managers, but it does help less competitor-oriented managers make resource allocation decisions that are more profitable and have better growth prospects. Our findings provide valuable theoretical insights and inform regulators about the unexpected real effects of enhanced comparability and transparency in the segment reporting setting. 

SHORT BIOGRAPHY:

Elaine Wang is the Dean’s Research Fellow and Professor of Accounting in the Isenberg School of Management, University of Massachusetts Amherst. She received her Ph.D. in Accounting from Nanyang Technological University in 2011, and her B.A. in Accounting from Renmin University of China in 2006. Dr. Wang has published papers in Journal of Accounting and Economics, Journal of Accounting Research, The Accounting Review, and Contemporary Accounting Research. Her research interests include investor and auditor judgment and decision making as well as the real effect of accounting and auditing disclosures on managers’ operating decisions. Dr. Wang is currently an editorial board member for Accounting, Organizations & Society, Behavioral Research in Accounting, and Journal of International Accounting Research. She also served as an editorial board member for Auditing: A Journal of Practice & Theory in past years. She is also an ad hoc reviewer for The Accounting Review, Journal of Accounting Research, Contemporary Accounting Research, Accounting, Organizations & Society, and Auditing: A Journal of Practice & Theory.