Changing pattern of competitive disadvantage from disclosing financial information : A case study of segmental reporting practice in Malaysia

Purpose – To empirically examine the changing pattern of competitive disadvantage experienced by the reporting companies in disclosing segmental information in the Malaysian environment. Design/methodology/approach – The study consists of a final sample of 116 Malaysian companies listed on the Malaysian Bourse for the years 2000‐2002. Four hypotheses were developed to investigate the relationship between segmental information disclosure and competitive disadvantage. Adopting weighted average correlation (WAC) techniques and total performance index (TPI), a multivariate least square regression model was employed to test the four formulated hypotheses. Findings – The statistical analysis employed provides a mixed pattern yet comprehensive understanding of relationship between segmental information disclosure and competitiveness level among 116 reporting companies listed in Malaysian Bourse from the years of 2000‐2002. Research limitations/implications – The proprietary theory assumes at least two forms that differ on the basis of who are included in the proprietary group. Secondly, the existence of discretionary judgments among managers in determining the segment definition, items to be disclosed and level of materiality involved. Lastly, the size of final sample leads to caution in generalizing the analysis. Practical implications – The results provide insights to interested groups such as accounting standard bodies, affected companies and the accounting profession, specifically in the Malaysian environment with the introduction of the new standard on segmental information disclosure known as MASB 22 segment reporting. Originality/value – The study is very timely especially with the introduction of new accounting standard governing segmental reporting by companies in Malaysian financial reporting environment. The great value of this study is highlighted by the effort to empirically investigate the competitive disadvantage experienced by the reporting companies as they disclose segmental information as required by the new standard.