Dain C. Donelson , Antonis Kartapanis , Colin Q. Koutney , Chris X. Zhao
{"title":"Public and private enforcement of non-GAAP reporting","authors":"Dain C. Donelson , Antonis Kartapanis , Colin Q. Koutney , Chris X. Zhao","doi":"10.1016/j.jaccpubpol.2025.107338","DOIUrl":null,"url":null,"abstract":"<div><div>This study provides evidence on the frequency and effectiveness of public and private enforcement of non-GAAP reporting. Although investors place weight on non-GAAP measures, there is little evidence on the extent and effectiveness of non-GAAP enforcement. The SEC uses comment letters to oversee non-GAAP reporting. While most firms appear to enhance future non-GAAP disclosures after receiving a comment letter, we also find that firms that receive non-GAAP comment letters are more likely than control firms to receive future non-GAAP comment letters, with the same comments often repeated. In addition, non-GAAP enforcement in the form of SEC AAERs and securities class action lawsuits is very rare. However, we find limited evidence of investor harm from managers’ non-GAAP exclusions that are incremental to analysts’ exclusions. This result suggests investors are skeptical of managers’ non-GAAP exclusions.</div></div>","PeriodicalId":48070,"journal":{"name":"Journal of Accounting and Public Policy","volume":"52 ","pages":"Article 107338"},"PeriodicalIF":3.3000,"publicationDate":"2025-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Accounting and Public Policy","FirstCategoryId":"91","ListUrlMain":"https://www.sciencedirect.com/science/article/pii/S0278425425000572","RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
This study provides evidence on the frequency and effectiveness of public and private enforcement of non-GAAP reporting. Although investors place weight on non-GAAP measures, there is little evidence on the extent and effectiveness of non-GAAP enforcement. The SEC uses comment letters to oversee non-GAAP reporting. While most firms appear to enhance future non-GAAP disclosures after receiving a comment letter, we also find that firms that receive non-GAAP comment letters are more likely than control firms to receive future non-GAAP comment letters, with the same comments often repeated. In addition, non-GAAP enforcement in the form of SEC AAERs and securities class action lawsuits is very rare. However, we find limited evidence of investor harm from managers’ non-GAAP exclusions that are incremental to analysts’ exclusions. This result suggests investors are skeptical of managers’ non-GAAP exclusions.
期刊介绍:
The Journal of Accounting and Public Policy publishes research papers focusing on the intersection between accounting and public policy. Preference is given to papers illuminating through theoretical or empirical analysis, the effects of accounting on public policy and vice-versa. Subjects treated in this journal include the interface of accounting with economics, political science, sociology, or law. The Journal includes a section entitled Accounting Letters. This section publishes short research articles that should not exceed approximately 3,000 words. The objective of this section is to facilitate the rapid dissemination of important accounting research. Accordingly, articles submitted to this section will be reviewed within fours weeks of receipt, revisions will be limited to one, and publication will occur within four months of acceptance.