The joint effects of corporate governance and regulation on the disclosure of manager-adjusted non-GAAP earnings in the US

Ross Jennings, Ana Marques

Research output: Contribution to journalArticlepeer-review

37 Citations (Scopus)

Abstract

This paper examines the joint effects of corporate governance and regulation by the Securities and Exchange Commission on the disclosure of manager-adjusted non-GAAP (or pro forma) earnings numbers in the United States. We provide evidence that prior to Regulation G investors were misled by disclosures of non-GAAP earnings, but only for disclosures made by firms with weaker corporate governance. After the SEC intervention there is no evidence that investors were still being misled. Furthermore, the effect of the intervention applied to both adjustments that areex anterecurring as well as to adjustments that just meet or beat analysts' forecasts.

Original languageEnglish
Pages (from-to)364-394
Number of pages31
JournalJournal of Business Finance and Accounting
Volume38
Issue number3-4
DOIs
Publication statusPublished - 1 Apr 2011

Keywords

  • Corporate governance
  • Independent directors
  • Institutional ownership
  • Non-GAAP earnings
  • Pro forma

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