Labor Unionization and Non-GAAP Reporting

51 Pages Posted: 16 Nov 2022 Last revised: 7 Aug 2023

See all articles by Riddha Basu

Riddha Basu

George Washington University - School of Business

Gary Chen

DePaul University

Spencer Pierce

Florida State University - College of Business

Date Written: November 3, 2022


We examine the influence of labor unions on non-GAAP reporting. We find managers are less likely to provide non-GAAP earnings disclosures after employees unionize. This relation arises because non-GAAP earnings metrics typically exclude expenses/losses and thus are higher than GAAP earnings. In contrast, we find managers are more likely to disclose non-GAAP earnings metrics that are lower than GAAP earnings following unionization. We also find that managers exclude fewer persistent expenses in calculating non-GAAP earnings metrics after employees unionize. These results are consistent with managers attempting to make the firm appear less profitable when faced with potential union negotiations. We also provide evidence that employee expenses are lower for unionized firms that do not provide non-GAAP disclosures, indicating one real benefit for managers from withholding these disclosures. Overall, our results suggest that managers modify their non-GAAP reporting to increase leverage in union negotiations and these disclosure choices have real consequences.

Keywords: Labor Unions; Non-GAAP Earnings; Employee Relations; Voluntary Disclosure

JEL Classification: M41, J53

Suggested Citation

Basu, Riddha and Chen, Gary and Pierce, Spencer, Labor Unionization and Non-GAAP Reporting (November 3, 2022). Available at SSRN: or

Riddha Basu

George Washington University - School of Business ( email )

Washington, DC 20052
United States

Gary Chen

DePaul University ( email )

1 East Jackson Blvd.
Chicago, IL 60604
United States

Spencer Pierce (Contact Author)

Florida State University - College of Business ( email )

423 Rovetta Business Building
Tallahassee, FL 32306-1110
United States

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