This paper investigates the value relevance of segment earnings in railroad companies. Operating profits in transportation and real estate business are value relevant. While operating losses in leisure business contains large noise, positive earnings is value relevant. Earnings in other segments are irrelevant. These results do not deny the prevailed thought that the diversification does not necessarily contribute to the growth of firm value. Operating revenues and expenses, investments, depreciation amount, and asset balances in each segment, which are mandated to disclose in Japan, are value relevant. In this sense, current disclosure regulation has a rational basis. Although the regulation on train fares was revised in the tide of deregulation, we cannot find the change in the relation between segment earnings and stock prices. The change of regulatory circumstances does not significantly influence the allocation of earnings over periods. On the other hand, accounting cross subsidization, i.e. the transfer of expenses from non-transportation segment to transportation segment, was reduced in second half period under investigation, as compared with the first half period. The change of regulatory circumstances affects the allocation of earnings among segments. However, the accounting subsidization (that is, the transfer of expenses) does not decrease the relevance of operating profits in segments. Discretionary allocation does not impair the information value of earnings. The transfer of expenses form non-transportation segment to transportation segment can increase the operating revenues in transportation segment, which is more certain than operating revenues in non-transportation segment, through cost principle in rate regulation and the transferred earnings is positively associated with firm value.