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The IUP Journal of Accounting Research and Audit Practices:
Segment Reporting Practices in Indian IT Companies
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A firm reporting by segments leaves more information in the hands of stakeholders and helps to improve the quality of decisions undertaken by them. AS-17 in India mandates listed and other companies to report information by segments. The present paper analyzes such segmental reporting practices of IT companies in view of their changing customer profile and geographical existence. The study finds the Indian IT companies to identify a few segments and business segment is the primary segment. Multiple-listed companies identify more segments than single stock exchange listed companies and revenue is the basic criteria used for identifying reportable segments. The sample firms score poorly in disclosing both mandatory and voluntary information. Profitability, listing status, external shareholding and proportion of independent directors positively affect the reporting practices of IT companies in India, while size of the firms affects negatively.

 
 
 

The corporate disclosure practices influence decision making not only at firm level, but also at individual, industry and economy levels. Comprehensive corporate disclosures improve the forecasting abilities, reduce risks involved, reduce cost of capital, and improve quality of operating and financial decisions undertaken by managers. At the individual level, the transparent disclosure practices would enable the investors to undertake risk-return analysis in an effective manner and hold optimum portfolios. This would also help in allocating resources at industry level for both individual and institutional investors. Botosan (1997) demonstrates that firms with higher disclosure quality benefit from lower cost of capital. Handa and Linn (1993) show that in their arbitrage pricing theory model, a Bayesian investor attributes more systematic risk to an asset with low information (e.g., poor disclosure) than to an asset with high information leading to lower demands and prices than under complete information.

 
 
 

Accounting Research and Audit Practices, Economic Performance, Millennium Development Goals, Corporate Sustainability, Economic Transactions, Social Management, Environmental Accounting, Corporate Houses, Environmental Management System, Community Development, Waste Management, German Firms, United Nations Environment Program.