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Annual Meeting (Halifax), the European Financial Management Association Annual Meeting (Vienna),

By Ole-kristian Hope, Wayne B. Thomas, Linda Bamber, Phil Berger, Øyvind Bøhren, Jeff Callen, Jere Francis, Ross Jennings, Roger Martin, Lil Mills and Pomorski Florin Vasvari


of Canada. Managerial Empire Building and Firm Disclosure This study tests the agency cost hypothesis in the context of geographic earnings disclosures. The agency cost hypothesis predicts that managers, when not monitored by shareholders, will make self-maximizing decisions which may not necessarily be in the best interest of shareholders. These decisions include aggressively growing the firm, which reduces profitability and destroys firm value. Geographic earnings disclosures provide an interesting context to examine this issue. Beginning with Statement of Financial Accounting Standards No. 131 (SFAS 131), most U.S. multinational firms are no longer required to disclose earnings by geographic area (e.g., net income in Mexico or net income in East Asia). Such non-disclosur

Year: 2007
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