Competitive Harm and Companies' Positions on SFAS No. 131

This paper examines companies' positions on the Financial Accounting Standards Board's (FASB) exposure draft (ED) for SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information. Companies' lobbying positions are obtained from comment letters sent in response to the FASB's 1996 request for input on the ED. We relate these positions to variables proxying for the likelihood a firm will be required to make its segment disclosures more informative and the potential for competitive harm, given the changes in segment disclosures' informativeness. We find that companies' lobbying positions toward the ED are explained by proxies for expected changes in segment disclosure when the standard described in the ED is adopted and by proxies for expected competitive harm related to the disclosure requirements in the new standard. These results imply that companies' responses to the FASB's ED were motivated by self-interest related to costs potentially imposed on them by the proposed new standard.