engleski

Segment Reporting for Shareholders: Myth or Reality

The purpose of this research is to present the research findings about the application of IFRS 8 Operating Segments in Croatian listed companies and their impact on the quality of financial reporting. The research is focusing on the effects of transition from IAS 14 to IFRS 8 considering changes in the number of reported segments and items disclosed. The initial implementation of IFRS 8 took place in 2009 although the standard was adopted in 2006. This standard was expected to: • Enable investors to see the business through management’s eyes. This means that investors can predict future cash flows more reliably. • Results in consistency between management commentaries and the financial statements, increasing investors’ understanding of communications from the entity’s management • Highlight the risk that management think are important by using management measures • Result in low incremental costs and substantial time savings by using management reporting. This will also mean that more interim reporting will be available. Design / methodology / approach: The paper tends to explore the presence of information on segments according to the IFRS 8 into notes to financial statements in Croatian listed companies for the years 2008, 2010 and 2012. The sample consists of 206 companies that are quoted at Croatian Financial market – Zagreb Stock exchange. Greatest number of enterprises examined come from Accommodation and food service activities (20%), Financial and insurance activities (16%), Manufacture of food products, beverages and tobacco products (10, 7%) Wholesale and retail trade, repair of motor vehicles and motorcycles (9, 7%) and Transportation and storage (5, 8%). Limitations of the sample are that some listed companies included into affiliations are treated as a unique operated segment within the affiliation. As a consequence, those companies do not report any information on their segments since they alone are treated as segments. The research is focusing on the content of information on segments prior to the implementation of IFRS 8 (year 2008), post implementation (year 2010) and improvement of the content of information after the implementation of IFRS 8 (year 2012). The parameters that are examined include: number of segments, segment revenues, operational expenses, earning before tax, depreciation and amortization of segment, assets and liabilities per segment and information on cash flow included in the segment reporting. Findings: Study results show that relatively small number of enterprises in Croatia report information on segments and that the content of these information and number of segments differs in each enterprise. The following table shows the number of enterprises examined and the number of enterprises reporting information on segments in the Notes to financial statements.

IFRS 8; segment reporting; Companies; responsibility

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