Telfer Research Seminar Series - Agnes Cheng
Segment Line-Item Omission under the “Management Approach” and Stock Price Updates Delay
Deadline: March 19, 2026,
***M.Sc. Students, these seminars can count towards the six mandatory Telfer Research Seminars Series required for your program (MGT 6191/ MGT 6991 / MHS 6991) (4 seminars for MSc Project-based students).***
Agnes Cheng, PhD
SFAS 131’s management approach requires firms to disclose segment-level line items only if top management regularly reviews them. We examine whether this approach provides investors with sufficient segment information for valuation. Using two decades of data following SFAS 131, we document that firms omit nearly 40% of mandated items and that item omissions, on average, delay stock-price responses to segment-related industry news. This omission-associated delay is largely absent among firms led by high-ability CEOs, who do not disclose more items overall but are less likely to omit core operating expense items. Item-level evidence links pricing delays to the omissions of segment profit measures and core operating expenses. Using the ASC 280 codification as a regulatory clarification event, we find that expense disclosure increases and price efficiency improves post-codification, consistent with clearer guidance strengthening implementation of the management approach. Overall, our findings suggest that the effectiveness of the management approach hinges on managerial review quality, supporting the FASB’s 2023 amendments on significant expense disclosure and underscoring the challenge of ensuring that “regularly reviewed” items reflect substance rather than form.
About the Speaker
Professor C.S. Agnes Cheng is the Professor in Accounting and Dale Looper Chair in Accounting at the Price College of Business, The University of Oklahoma. Before then, she was the Chair Professor and Head of the School of Accounting
