Has Regulation G Improved the Information Quality of Non-GAAP Earnings Disclosures?

Based on hand-collected non-GAAP earnings disclosures from 2001 to mid 2004, this paper finds that firms with communication motives, proxied by historically low returns-GAAP earnings relation, are more likely to disclose non-GAAP earnings in the post-Reg G period than in the pre- Reg G period. In co...

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Bibliographic Details
Published in:Seoul Journal of Business 2012, 18(2), , pp.95-146
Main Author: 이한상
Format: Article
Language:English
Subjects:
Business metrics
Communication
Disclosure
Earnings
Earnings per share
Financial reporting
GAAP
Intervention
Regulation of financial institutions
SEC regulations
Studies
경영학
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Summary:Based on hand-collected non-GAAP earnings disclosures from 2001 to mid 2004, this paper finds that firms with communication motives, proxied by historically low returns-GAAP earnings relation, are more likely to disclose non-GAAP earnings in the post-Reg G period than in the pre- Reg G period. In contrast, firms with opportunistic motives, proxied by GAAP loss and negative GAAP EPS changes, are less likely to disclose non- GAAP earnings in the post-Reg G period than in the pre-Reg G period. With additional test results, the findings of this paper appear consistent with Congress' and the SEC's intervention in pro-forma reporting practices resulting in improvements in the quality of information provided in non- GAAP earnings disclosures. [PUBLICATION ABSTRACT]
ISSN:1226-9816
DOI:10.35152/snusjb.2012.18.2.004