Macroeconomic uncertainty and non-GAAP disclosure

Junjun Liu

Finance Research Letters, 2024, vol. 60, issue C

Abstract: This study examines the relation between macroeconomic uncertainty and firms’ non-GAAP disclosure. Using the dispersion of GDP forecasts and the Chicago Board Options Exchange (CBOE) VIX Index to proxy for macroeconomic uncertainty, this study finds that non-GAAP reporting likelihood decreases during periods of high macroeconomic uncertainty. However, for firms that choose to disclose non-GAAP earnings, their non-GAAP exclusions become more transitory, indicating an increase in non-GAAP reporting quality. Further evidence suggests that the increase in non-GAAP reporting quality is driven by the decrease in the persistence of excluded special items. Overall, the findings of this study advance the knowledge of how non-GAAP disclosure changes as macroeconomic uncertainty varies.

Keywords: Macroeconomic uncertainty; Non-GAAP disclosure; GDP forecast dispersion; VIX Index (search for similar items in EconPapers)
JEL-codes: D80 M41 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:60:y:2024:i:c:s1544612323012886

DOI: 10.1016/j.frl.2023.104916

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