Non-IFRS Disclosure and Income Statement Disaggregation

Abstract

This study investigates the determinants and consequences of non-IFRS disclosure, taking into consideration the fact that firms may publish a disaggregated income statement. We argue that there is a tradeoff between non-IFRS disclosure and the disaggregation of income statement numbers. Our results are based on a sample of French listed companies over the period 2007-2015. We find that non-IFRS earnings are useful to predict future cash flows only for firms providing disaggregated income statements. Conversely, when firms choose to use an aggregated income statement format, non-IFRS adjustments provide no additional information content for financial statement users.

Keywords: Non-GAAP Earnings, Non-IFRS Earnings, Adjusted Earnings, Income Statement Disaggregation, Future Cash Flows

JEL Classification: M41