Sec Interventions and the Frequency and Usefulness of Non-Gaap Financial Measures

48 Pages Posted: 30 Mar 2005

See all articles by Ana Cristina Marques

Ana Cristina Marques

Norwich Business School - University of East Anglia

Date Written: July 26, 2005

Abstract

This paper examines the effect on both firms and investors of two SEC regulatory interventions related to disclosure of non-GAAP financial measures. There are three main results. First, both periods after the SEC's interventions are associated with a decrease in the probability of disclosure of non-GAAP financial measures and this decline accelerates through the period. Second, all else equal, investors do not value firms higher or lower because of the disclosure of non-GAAP financial measures. Finally, investors accept as generally transitory the adjustments to GAAP income made by I/B/E/S financial analysts, but not the additional adjustments made by firms.

Keywords: non-GAAP financial measures, Regulation G, disclosure

JEL Classification: M41, M45, G12, G29, G38

Suggested Citation

Marques, Ana Cristina, Sec Interventions and the Frequency and Usefulness of Non-Gaap Financial Measures (July 26, 2005). AAA 2006 Financial Accounting and Reporting Section (FARS) Meeting Paper, Available at SSRN: https://ssrn.com/abstract=679621 or http://dx.doi.org/10.2139/ssrn.679621

Ana Cristina Marques (Contact Author)

Norwich Business School - University of East Anglia ( email )

Norwich
NR4 7TJ
United Kingdom

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