An Empirical Investigation of New and Existing Non-GAAP Exclusion Quality Indicators

• 成果类型: Article; Early Access
• 署名作者: Davidson, Samuel O.; Gomez, Enrique A.; Heflin, Frank; Wallace, Dana
• 署名单位: Baylor University; Pennsylvania Commonwealth System of Higher Education (PCSHE); Temple University; University System of Georgia; University of Georgia; State University System of Florida; University of Central Florida
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826; 1558-7967
• DOI: 10.2308/TAR-2023-0299
• 发表日期: 2026-08-28
• 关键词: NON-GAAP EARNINGS; voluntary disclosure; earnings quality; benchmark beating; pro forma earnings; street earnings; VALUE RELEVANCE; predictive-value; management; INFORMATION; disclosure; analysts; profitability; performance

摘要

We examine commonly used indicators of aggressive non-GAAP exclusions and find that the majority perform poorly at identifying low-quality exclusions in terms of decision usefulness for investors. We propose a new firm-quarter-specific indicator that identifies instances in which GAAP earnings quality is high (i.e., when firms have less need to provide non-GAAP metrics) but managers disclose non-GAAP earnings anyway. Our new indicator is easy to calculate, requires minimal data, and performs far better at identifying low-quality exclusions than indicators used in prior research. Using our indicator, we find instances in which managers exclude earnings components that are decision useful, consistent with regulators' concerns about the quality of some non-GAAP earnings disclosures. Our results are robust to a variety of specification checks.