Disclosure of Segment Information in the Annual Financial Statements And the Factors Affecting it: An Applied Study in Saudi Industrial Companies

Abstract

This study aimed to test and analyze hypotheses related to if there are statistical differences between companies in disclosing their segments information. Moreover, this study focuses on identifying the effect of the company’s characteristics (The size of a company, Leverage, Profitability, Audit quality, The level of liquidity, The company’s age) on the level of disclosure. A descriptive analytical approach is used in this study with 45 Saudi industrial companies in different sectors during the year 2018-2019.

The study found that those differences are existing, and Maaden company has the highest disclosure level. In addition, the size of the company, leverage, profitability and the level of liquidity have a positive impact on the level of disclosure of segments information while the company’s age does not have any impact.

This study recommends that companies need to increase the awareness of the importance of segments information disclosure by holding workshops and seminars. Also, developing an Indicator for information segments disclosure that follow the requirements of IFRS 8 of operation segments can contribute in improving the comparison way between the disclosure level of companies.