Again, in the 1960’s societal pressures resulted in financial reporting changes. Amid the civil rights movement, the feminine movement, and the environmental movement, congressional hearings of the Subcommittee on Antitrust and Monopoly of the Senate Committee on the Judiciary began to investigate U.S. industries. During these hearings, in 1965, economics Professor Joel Dirlam recommended in his testimony that the Securities and Exchange Act of 1934 be amended to require corporations to report “the relative profitability of different divisions and product lines”. The Subcommittee was so intrigued by this idea that it asked Manuel Cohen, Chairman of the SEC to comment on Professor Dirlam’s recommendation. Cohen responded “with a letter and memorandum to Senator Hart [Chairman of the Subcommittee on Antitrust and Monopoly] …pointing out some of the difficulties of Dirlam’s proposal and reasons for not requiring such information at that time.”
In May 1966, Manuel Cohen addressed the Financial Analysts Federation at their annual meeting stating that disclosure of sales and profit on a divisional basis should be the next goal of financial reporting by conglomerate companies. According to Skousen “[t]his date is often accepted as the beginning of the campaign for segmented disclosure by diversified companies.” Later in 1966 “Cohen testified before the Subcommittee on Anti-trust and Monopoly, indicating that the SEC already has authority under the 1933 and 1934 Acts to require disclosure of segment operating results if that is in the interest and for the protection of the investing public.”
This caught the attention of many different professional financial organizations who according to Sprouse had “an apprehensive attitude toward the activities of the SEC…[i]t was considered important, therefore, that some group seize the initiative in determining how far the reporting requirements for diversified companies should go and in marshalling the support for acceptable recommendations.” In 1967 the Accounting Principles Board (APB) released its Statement No. 2, “Disclosure of Supplemental Financial Information by Diversified Companies”, which
urge[d] diversified companies to disclose voluntarily supplemental financial information as to industry segments of the business. The Board believes that the experience derived from voluntary disclosure...