Qualitative characteristics of non-GAAP disclosures and non-GAAP earnings quality

• 成果类型: Article
• 署名作者: Chen, Han-Chung; Lee, Yen-Jung; Lo, Sheng-Yi; Yu, Yong
• 署名单位: National Taipei University; National Taiwan University; Feng Chia University; University of Texas System; University of Texas Austin
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2021.101402
• 发表日期: 2021
• 关键词: pro forma earnings; voluntary disclosure; managers use; determinants; cost; Informativeness

摘要

We examine how the qualitative characteristics of a non-GAAP earnings disclosure reveal the quality of the non-GAAP performance metric itself. We measure the qualitative aspects of the non-GAAP disclosure using an index of 12 hand-coded characteristics and presen-tation choices that provide context to non-GAAP disclosures. We find that more trans-parent qualitative information in non-GAAP disclosures is associated with more transitory non-GAAP exclusions and a lower likelihood that managers will aggressively exclude ex-penses in calculating non-GAAP earnings to meet or beat analysts' forecasts. We also find that the association between non-GAAP exclusions and earnings announcement period returns is less negative for firms with more transparent qualitative information accom-panying their non-GAAP disclosures. Overall, these results suggest that qualitative char-acteristics of non-GAAP disclosures convey useful information about the quality of non-GAAP earnings metrics. (c) 2021 Elsevier B.V. All rights reserved.