Are inter-segment revenues informative about future performance?

Xiaobo Dong, K. C. Lin, Yingxu Kuang

Research output: Contribution to journalArticlepeer-review

2 Scopus citations


This study investigates the degree to which a specific component of segmental disclosure, intersegment transactions, informs future segment-level and firm-level profitability. By using segment data reported under the FAS No. 131 regime, we find a positive association between intersegment revenues and one-year-ahead segment operating profits; this association is weakened by agency costs but not proprietary costs. We also find that the aggregate intersegment revenue reported by a firm is positively associated with future firm-level earnings. However, analysts seem to underreact to information in aggregate intersegment revenue.

Original languageEnglish
Pages (from-to)298-308
Number of pages11
JournalAdvances in Accounting
Issue number2
StatePublished - 2014
Externally publishedYes


  • Analyst forecast error
  • FAS 131
  • Inter-segment revenue
  • M41


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