SEC interventions and the frequency and usefulness of non-GAAP financial measures

Ana Marques ()
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Ana Marques: Faculdade de Economia da Universidade Nova de Lisboa

Review of Accounting Studies, 2006, vol. 11, issue 4, No 5, 549-574

Abstract: Abstract This paper examines the effect of two Securities and Exchange Commission regulatory interventions related to disclosure of non-GAAP financial measures. There are three main results. First, the probability of disclosure of non-GAAP earnings declines in 2003, but the probability of disclosure of other non-GAAP financial measures has an accelerated decline after the first intervention. Second, all else equal, after Regulation G, investors have a positive market reaction to the disclosure of non-GAAP earnings. Finally, investors react to the adjustments made by I/B/E/S financial analysts as they do to the GAAP surprise, but they do not react to the additional adjustments made by firms.

Keywords: Non-GAAP financial measures; Pro forma; Disclosure; Financial analysts (search for similar items in EconPapers)
JEL-codes: M4 (search for similar items in EconPapers)
Date: 2006
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DOI: 10.1007/s11142-006-9016-x

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