TY - JOUR
T1 - Disclosure strategies among S&P 500 firms
T2 - evidence on the disclosure of non-GAAP financial measures and financial statements in earnings press releases
AU - Marques, Ana
PY - 2010/6/1
Y1 - 2010/6/1
N2 - This paper examines the prominence of non-GAAP financial measures in press releases, testing whether managers emphasize these adjusted performance measures relative to GAAP numbers in four different settings where their disclosure helps managers reach strategic earnings benchmarks on a pro forma basis when they would otherwise fall short using GAAP numbers. Moreover, this research investigates the information content of disclosures reconciling non-GAAP to GAAP earnings (and other financial statements). The data is hand collected from quarterly earnings press releases of a sample of S&P 500 firms during the 2001-2003 period. In this particular sample, the disclosure of non-GAAP financial measures is frequent. The results suggest that managers strategically give more prominence to non-GAAP measures than to GAAP figures when the GAAP earnings number falls short of a benchmark but the non-GAAP earnings number does not. This disclosure strategy may influence the perception of the firm's financial results. Furthermore, the results suggest that both the reconciliation and the non-GAAP income statement contain information useful for users.
AB - This paper examines the prominence of non-GAAP financial measures in press releases, testing whether managers emphasize these adjusted performance measures relative to GAAP numbers in four different settings where their disclosure helps managers reach strategic earnings benchmarks on a pro forma basis when they would otherwise fall short using GAAP numbers. Moreover, this research investigates the information content of disclosures reconciling non-GAAP to GAAP earnings (and other financial statements). The data is hand collected from quarterly earnings press releases of a sample of S&P 500 firms during the 2001-2003 period. In this particular sample, the disclosure of non-GAAP financial measures is frequent. The results suggest that managers strategically give more prominence to non-GAAP measures than to GAAP figures when the GAAP earnings number falls short of a benchmark but the non-GAAP earnings number does not. This disclosure strategy may influence the perception of the firm's financial results. Furthermore, the results suggest that both the reconciliation and the non-GAAP income statement contain information useful for users.
KW - Non-GAAP financial measures
KW - Pro forma financial measures
KW - Reconciliation
KW - Strategic benchmarks
UR - http://www.scopus.com/inward/record.url?scp=77953081817&partnerID=8YFLogxK
U2 - 10.1016/j.bar.2010.02.004
DO - 10.1016/j.bar.2010.02.004
M3 - Article
AN - SCOPUS:77953081817
SN - 0890-8389
VL - 42
SP - 119
EP - 131
JO - British Accounting Review
JF - British Accounting Review
IS - 2
ER -