Profit reporting by diversified companies

Abstract

The recent emergence of a large number of conglomerate companies with diversified product lines is largely due to acquisitions of other companies and the setting up of new activities as divisions within existing companies, Initial official opposition to such diversification has been overcome by court rulings and the attractions of higher profitability. Managements are by and large extremely allergic to the idea of profit reporting by divisions. This article examines the reasons cited against divisional profit reporting and finds that none of these make out a strong enough case against it The question now is not whether conglomerates should report profits by divisions or not but