Small Cap Financial Reporting: Determinants of Emphasis and Placement of Non-GAAP Disclosures
Posted: 27 Jan 2017
Date Written: October 2010
This study examines the determinants of emphasis on non-GAAP disclosures in the earnings announcements of small cap companies. Two proxies of non-GAAP information emphasis are investigated — placement of the first non-GAAP disclosure and placement of the non-GAAP to GAAP reconciliation required by Regulation G. Using hand-collected data from fourth quarter press releases, we find evidence indicating that small cap firms place a higher level of emphasis on non-GAAP financial measures when GAAP earnings suggest lower value-relevance and when their shares are owned by a higher proportion of institutional investors. We also find that small cap companies decrease the level of emphasis placed on non-GAAP information as their listing tenure increases.
Keywords: Earnings Announcements, Non-GAAP Disclosures, GAAP Reconciliation, Regulation G
JEL Classification: M40, M41, M42
Suggested Citation: Suggested Citation