An Empirical Evaluation of the Predictive Ability of Segment Data

Abstract

Financial statement users have expressed concerns about the ability to assess

earnings potential and riskiness of diversified firms as conglomerate mergers

and acquisitions increased rapidly during the 1960' s. As shown in congressional

hearing records and survey, financial analysts and other financial statements

users have contended that consolidated financial statements do not provide

sufficient informaion to assist in analyzing diversified firms and thus segment

data might be important in assessing future prospects of a diversified firm.