The Disclosure of Non-GAAP Earnings Following Regulation G: An Analysis of Transitory Gains

Author:

Baumker Michael1,Biggs Philip1,McVay Sarah E.1,Pierce Jeremy1

Affiliation:

1. Michael Baumker is a Senior Audit Associate at KPMG, Philip Biggs is an Accountant at Tetra Capital, Sarah E. McVay is an Associate Professor at the University of Washington, and Jeremy Pierce is an Experienced Associate at PwC.

Abstract

SYNOPSIS We investigate how managers report one-time gains resulting from legal settlements and insurance recoveries in press releases following Regulation G. Regulation G may have had the unintended consequence of allowing managers to omit mention of these transitory gains, resulting in higher reported performance absent non-GAAP disclosure. We find that while managers generally provide some information about transitory gains in the earnings announcement, there is a large amount of variation in the granularity of the detail. For example, the vast majority of managers (88.5 percent) mention the gain in the earnings announcement, but few (34 percent) report non-GAAP earnings per share summary figures explicitly excluding transitory gains. This percentage is significantly lower than pre-Regulation G, where approximately 62 percent of firms reported non-GAAP earnings per share excluding the transitory gain. Interestingly, we find that gains are less likely to be carved out of earnings when there are no concurrent transitory losses, providing some evidence that there continues to be an opportunistic component of non-GAAP reporting following Regulation G. Data Availability: Data are available from sources identified in the text.

Publisher

American Accounting Association

Subject

Accounting

Reference22 articles.

1. Why do pro forma and Street earnings not reflect changes in GAAP? Evidence from SFAS 123R;Barth;Review of Accounting Studies,2012

2. Assessing the relative informativeness and permanence of pro forma earnings and GAAP operating earnings;Bhattacharya;Journal of Accounting & Economics,2003

3. Empirical evidence on recent trends in pro forma reporting;Bhattacharya;Accounting Horizons,2004

4. U.S;Black;Journal of Business Finance & Accounting,2009

5. Has the regulation of pro forma reporting in the U.S. changed investors' perceptions of pro forma earnings disclosures?;Black;Journal of Business Finance & Accounting,2012

Cited by 30 articles. 订阅此论文施引文献 订阅此论文施引文献,注册后可以免费订阅5篇论文的施引文献,订阅后可以查看论文全部施引文献

同舟云学术

1.学者识别学者识别

2.学术分析学术分析

3.人才评估人才评估

"同舟云学术"是以全球学者为主线,采集、加工和组织学术论文而形成的新型学术文献查询和分析系统,可以对全球学者进行文献检索和人才价值评估。用户可以通过关注某些学科领域的顶尖人物而持续追踪该领域的学科进展和研究前沿。经过近期的数据扩容,当前同舟云学术共收录了国内外主流学术期刊6万余种,收集的期刊论文及会议论文总量共计约1.5亿篇,并以每天添加12000余篇中外论文的速度递增。我们也可以为用户提供个性化、定制化的学者数据。欢迎来电咨询!咨询电话:010-8811{复制后删除}0370

www.globalauthorid.com

TOP

Copyright © 2019-2024 北京同舟云网络信息技术有限公司
京公网安备11010802033243号  京ICP备18003416号-3