Multivariate Analysis in Segment Reporting by Large Industry Firms in Greece

Abstract

In the present paper, the usefulness of Segmented Financial Reporting is evaluated by applying the statistical methods of Discriminant Analysis and Factor Analysis to a sample of large Greek Industrial Firms. The sample is composed of 73 firms, 53 of which prepare segmented financial statements for intra-firm purposes. The results of the analysis indicate that there exist three factors which discriminate, at a statistically significant level, the two groups of firms mentioned above. Furthermore, these factors are found to dominate the intensity of the differences between the two groups of firms. Mainly, the factors are summarised as follows: i) the efficiency in the estimation and prediction of a firm’s overall financial statements from segmented financial information, ii) the usefulness of segment reporting to the users of financial statements, iii) the ability of segmented financial statements in the prediction of main financial data for the firm as a whole. In conclusion, it is argued in the paper that the decision as to whether to report segmented financial statements depends heavily on the above mentioned factors which in turn, dominate the attitude of firms towards segment reporting.KeywordsMultivariate AnalysisFactor AnalysisDiscriminant AnalysisSegment ReportingGreek Industrial Firms