Non-GAAP EPS Denominator Choices
成果类型：
Article
署名作者：
Gee, Kurt H.; Linsmeier, Thomas J.; Partridge, Clay
署名单位：
University System of Ohio; Ohio State University; University of Wisconsin System; University of Wisconsin Madison
刊物名称：
ACCOUNTING REVIEW
ISSN/ISSBN：
0001-4826
DOI：
10.2308/TAR-2021-0554
发表日期：
2021
页码：
191-218
关键词：
摘要：
We provide the first evidence after Regulation G on firms' non-GAAP EPS denominator choices and whether they are informative or opportunistic. From 2013 to 2019, 17 percent of annual non-GAAP EPS numbers use denominators different from that of GAAP diluted EPS, which makes denominator adjustments among the most prevalent individual types of non-GAAP adjustments. For firms reporting GAAP and non-GAAP profits or GAAP losses and non-GAAP profits, we provide evidence consistent with denominator adjustments increasing non-GAAP EPS informativeness. Our evidence also suggests that opportunism in denominator choices is concentrated in firms reporting GAAP losses and non-GAAP profits and failing to adjust the denominator. Such nonadjustment is inconsistent with SEC requirements to report non-GAAP EPS on a diluted basis because the EPS denominator fora GAAP loss excludes dilutive claims. Although the SEC largely overlooks such firms, they are more likely, on average, to report non-GAAP EPS that analysts consider inflated.