Accounting Reporting Complexity and Non-GAAP Earnings Disclosure

• 成果类型: Article
• 署名作者: Brown, Nerissa C.; Huffman, Adrienna A.; Cohen, Shira
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign; The Brattle Group; California State University System; San Diego State University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2018-0760
• 发表日期: 2023
• 页码: 37-71
• 关键词: financial statement complexity; pro forma; REPORT READABILITY; DELISTING BIAS; INFORMATION; Managers; EVOLUTION; QUALITY; STREET

摘要

We examine whether the complexity of mandatory accounting disclosures prompts managers to voluntarily disclose adjusted measures of actual earnings performance, and whether this practice reflects attempts to obfuscate or mitigate the informational opacity accounting complexity creates for investors. Using the metadata in XBRL filings, we construct measures of accounting complexity that map directly to the mandated standards applied in financial statement filings. We find a positive and economically significant association between accounting complexity and managers' propensity to disclose non-GAAP earnings information. This relation is robust and incremental to common measures of business and linguistic complexity, and the transitory nature of firms' economic activities. We also find that the quality and informativeness of adjusted earnings information increases with accounting complexity, consistent with motives to better inform investors when accounting disclosures are complex. Overall, our results suggest that managers use non-GAAP earnings disclosure to mitigate the adverse informational effects of accounting complexity.