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    Industry effects in firm and segment profitability forecasting

    Schröder, David and Yim, A. (2017) Industry effects in firm and segment profitability forecasting. Contemporary Accounting Research 35 (4), pp. 2106-2130. ISSN 1911-3846.

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    Abstract

    Academics and practitioners have long reco gnized the importance of a firm’s industry membership in explaining its financial performa nce. Yet, contrary to conventional wisdom, recent research shows that industry-specific profita bility forecasting models are not better than economy-wide models. The objective of this paper is to further explore this result and to provide insights into when and why indus try-specific profitability fore casting models are useful. We show that industry-specific forecasts are signifi cantly more accurate in predicting profitability for single-segment firms and, to some extent, fo r business segments. For multiple-segment firms, the aggregation of segment-level data for external reporting of firm-level financials obliterates the industry effects of their segments.

    Metadata

    Item Type: Article
    Keyword(s) / Subject(s): Industry membership, Profitability forecasting, Disaggregation, Segment disclosure
    School: School of Business, Economics & Informatics > Economics, Mathematics and Statistics
    Depositing User: David Schroeder
    Date Deposited: 14 Aug 2017 08:09
    Last Modified: 20 Jul 2020 23:07
    URI: https://eprints.bbk.ac.uk/id/eprint/19350

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