Geographic segment disclosures under IFRS 8: Changes in materiality and fineness by European, Australian and New Zealand blue chip companies

This study examines how the adoption of International Financial Reporting Standard (IFRS) 8, Operating Segments, changed the entity-wide geographic segment reporting by European, Australian and New Zealand blue chip companies. The focus is on the revised requirements that companies disclose revenues for the country of domicile and other material countries. Specifically, it investigates the materiality level companies use to determine material countries and whether the revised requirements result in a finer set of geographic information than previously disclosed under International Accounting Standard (IAS) 14R.

The study finds a significant decrease in the number of companies reporting only broad geographic regions and a significant increase in the number of companies reporting country specific segments and a mix of countries and regions after the adoption of IFRS 8. The increase in companies reporting country specific and mixed segments indicates that the requirement to disclose material countries under IFRS 8 resulted in a significant number of companies reporting disaggregated revenues at the individual country level. To the extent country specific information is more useful, financial analysts and the International Accounting Standards Board (IASB) should welcome this result.

All three fineness measures increase significantly with the adoption of IFRS 8. These results indicate that the adoption of IFRS 8 did improve the fineness of the geographic disclosures provided by companies and suggests that the geographic data provided under IFRS 8 is less aggregated than the disclosures under IAS 14R.