Do High-Quality Auditors Improve Non-GAAP Reporting?

• 成果类型: Article
• 署名作者: Feng, Zhuoan; Francis, Jere R.; Shan, Yaowen; Taylor, Stephen L.
• 署名单位: University of Waikato; Maastricht University; University of Technology Sydney
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2019-0592
• 发表日期: 2023
• 页码: 215-250
• 关键词: industry expertise; pro forma; earnings quality; voluntary disclosure; VALUE-RELEVANCE; big 4; Managers; specialization; Reputations; proxies

摘要

Prior research finds that clients of high-quality auditors report higher-quality GAAP earnings. We extend this research to investigate whether auditor quality is associated with the quality of voluntarily disclosed non-GAAP earnings measures. Using a sample of Australian firms disclosing annual non-GAAP metrics, we find that clients of high-quality auditors are more likely to voluntarily disclose non-GAAP earnings numbers. However, clients of high -quality auditors make adjustments in calculating non-GAAP earnings (non-GAAP exclusions) that are less predictive of future earnings and less value relevant than those of other firms. These results indicate that their adjustments are of higher quality. We also find similar results for U.S. firms using a sample of quarterly non-GAAP earnings disclosures. Overall, our evidence indicates that commonly used indicators of audit quality for GAAP reporting are positively associated with the quality of voluntarily disclosed non-GAAP earnings measures.