Geographical disclosure quality under IFRS 8: a European Union analysis

Abstract

In November 2006, the International Financial Reporting Standard 8 (IFRS 8) was issued as a substitute for the International Accounting Standard 14 Revised (IAS 14R) and became effective in 2009. This paper aims to describe and evaluate the quality of geographical disclosure following the adoption of IFRS 8. Our methodology is two-fold. First, a content analysis of the annual reports of 171 publicly listed European Union (EU) companies during the period from 2006 to 2012 shows substantial variation in geographical disclosure practices. Second, a multiple regression analysis shows the negative impact of IFRS 8 on the quality of geographical disclosure measured by two proxies, namely extent and fineness. Our findings, also, suggest that geographical disclosure quality is associated with firm size and that more internationally oriented firms provide finer geographical segments compared to their counterparts.