The risk-relevance of non-GAAP earnings

• 成果类型: Article
• 署名作者: Heflin, Frank; Kolev, Kalin S.; Whipple, Benjamin
• 署名单位: University System of Georgia; University of Georgia; City University of New York (CUNY) System; Baruch College (CUNY)
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-022-09725-w
• 发表日期: 2024
• 页码: 493-524
• 关键词: pro forma earnings; predictive-value; INFORMATION; Managers; prices; STREET; SECURITIZATIONS; volatility; components; reflect

摘要

We study the risk-relevance of non-GAAP earnings. Risk is an important earnings attribute in valuation models, and the FASB's conceptual framework identifies providing information about risk as a primary objective for earnings. Although prior research addresses the value-relevance of non-GAAP earnings, researchers have paid little attention to their risk-relevance. We find that non-GAAP adjustments yield an earnings number that isolates the more risk-relevant components of earnings. Excluded earnings components, however, contain some, albeit less, information about risk. Thus, although non-GAAP earnings can help investors prioritize the more versus less risk-relevant components of earnings, non-GAAP earnings are potentially most informative about risk when used together with GAAP earnings.