First Voluntary Disclosure: Is It Less Opportunistic?
Published in Asia-Pacific Journal of Accounting and Economics, 2015, Vol. 22, No. 4
32 Pages Posted: 27 Jan 2014 Last revised: 21 Jan 2016
Date Written: February 1, 2014
The objective of voluntary disclosure regulation is to mitigate information asymmetry between the management and outside users. However, prior studies on voluntary disclosures provide mixed evidences on managers’ incentives. Using a setting of voluntary non-GAAP EPS reporting, this study attempts to examine whether the first non-GAAP EPS reporting is less dominated by opportunistic incentives. Consistent with the predictions of this research, it reveals that the duration to the first adjusted EPS disclosure is not more sensitive to negative transitory items and moreover, investors’ perception on the first non-GAAP EPS is more positive compared to subsequent ones. The less opportunistic behaviour on the first disclosure can be well explained by the management’s awareness of intensified monitoring by outside stakeholders.
Keywords: First voluntary disclosure, Opportunistic incentive, Transitory earnings, Non-GAAP EPS
JEL Classification: M41
Suggested Citation: Suggested Citation