Do Non-GAAP Exclusions Impact the Extent to Which Current Returns Reflect Future Earnings Information?
| dc.contributor.advisor | Black, Ervin | |
| dc.contributor.author | Brockbank, Bryan G. | |
| dc.contributor.committeeMember | Litov, Lubomir | |
| dc.contributor.committeeMember | Hennes, Karen | |
| dc.contributor.committeeMember | Price, Richard | |
| dc.contributor.committeeMember | Thomas, Wayne | |
| dc.date.accessioned | 2017-05-03T14:43:48Z | |
| dc.date.available | 2017-05-03T14:43:48Z | |
| dc.date.issued | 2017-05-12 | |
| dc.date.manuscript | 2017-05 | |
| dc.description.abstract | Motivated by regulators’ concerns about non-GAAP financial measures and building on research that finds more informative disclosures allow current stock returns to better reflect future earnings, I examine whether non-GAAP earnings exclusions enhance or garble the future earnings news captured in current stock returns. Utilizing a novel data collection technique using Amazon Mechanical Turk (MTurk), I collect non-GAAP earnings data from 2003 to 2012 and measure managers’ non-GAAP exclusions relative to three comparable earnings: (1) GAAP earnings before extraordinary items, (2) GAAP earnings from operations, and (3) analyst-adjusted “street earnings.” I find a negative association between the magnitude of managers’ non-GAAP exclusions and the extent to which current returns reflect future earnings information. Additional tests reveal this negative association is due to income-increasing exclusions. I find similar results using the association between current returns and either future earnings from operations or future non GAAP earnings. I also provide evidence of increased garbling of future earnings news when managers use incremental non GAAP exclusions to meet or beat the consensus earnings forecast. Finally, I find that consistent non-GAAP reporting is associated with more future earnings information reflected in current stock returns. | en_US |
| dc.identifier.uri | http://hdl.handle.net/11244/50447 | |
| dc.language | en | en_US |
| dc.subject | Non-GAAP Earnings | en_US |
| dc.subject | Non-GAAP Exclusions | en_US |
| dc.subject | Future Earnings Response Coefficient (FERC) | en_US |
| dc.thesis.degree | Ph.D. | en_US |
| dc.title | Do Non-GAAP Exclusions Impact the Extent to Which Current Returns Reflect Future Earnings Information? | en_US |
| ou.group | Michael F. Price College of Business | en_US |
| shareok.nativefileaccess | restricted | en_US |
| shareok.orcid | 0000-0003-2035-6314 | en_US |