Non-GAAP Disclosures and CEO Pay Levels

IF 2 Q2 BUSINESS, FINANCE

International Journal of Accounting Pub Date : 2020-11-17 DOI:10.1142/s109440602050016x

D. Lont, D. Ranasinghe, Helen Roberts

{"title":"Non-GAAP Disclosures and CEO Pay Levels","authors":"D. Lont, D. Ranasinghe, Helen Roberts","doi":"10.1142/s109440602050016x","DOIUrl":null,"url":null,"abstract":"We examine the association between CEO cash and equity compensation and non-GAAP disclosure practices in a responsive regulatory and opaque compensation reporting environment. Our empirical evidence, based on a sample of public companies in New Zealand, shows that CEO cash compensation is associated with the likelihood and frequency of non-GAAP disclosures, whereas equity incentives are not. Our results document evidence of an increase in the frequency of non-GAAP disclosures and a decrease in the provision and quality of reconciliation between non-GAAP measures and closely related GAAP measures around CEO cash compensation. In particular, managers use these disclosures when their GAAP earnings benchmarks are missed. A marginal decrease in opportunistic non-GAAP disclosures following the adoption of the International Financial Reporting Standards (IFRS) indicates little change in reporting behavior following adoption of IFRS. Our findings suggest that managers disclose non-GAAP measures with opportunistic intentions motivated by compensation and points to the need for regulators to set policy about clear reconciliation standards.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":"1 1","pages":"2050016"},"PeriodicalIF":2.0000,"publicationDate":"2020-11-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"4","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Journal of Accounting","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1142/s109440602050016x","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}

引用次数: 4

Abstract

We examine the association between CEO cash and equity compensation and non-GAAP disclosure practices in a responsive regulatory and opaque compensation reporting environment. Our empirical evidence, based on a sample of public companies in New Zealand, shows that CEO cash compensation is associated with the likelihood and frequency of non-GAAP disclosures, whereas equity incentives are not. Our results document evidence of an increase in the frequency of non-GAAP disclosures and a decrease in the provision and quality of reconciliation between non-GAAP measures and closely related GAAP measures around CEO cash compensation. In particular, managers use these disclosures when their GAAP earnings benchmarks are missed. A marginal decrease in opportunistic non-GAAP disclosures following the adoption of the International Financial Reporting Standards (IFRS) indicates little change in reporting behavior following adoption of IFRS. Our findings suggest that managers disclose non-GAAP measures with opportunistic intentions motivated by compensation and points to the need for regulators to set policy about clear reconciliation standards.

查看原文本刊更多论文

非公认会计准则披露和CEO薪酬水平

我们研究了在响应性监管和不透明的薪酬报告环境中，CEO现金和股权薪酬与非公认会计准则披露实践之间的关系。我们基于新西兰上市公司样本的经验证据表明，CEO现金薪酬与非公认会计准则披露的可能性和频率相关，而股权激励则无关。我们的结果证明，非GAAP披露的频率有所增加，而非GAAP指标与密切相关的GAAP指标之间关于CEO现金薪酬的调节的提供和质量有所下降。特别是，当他们的GAAP收益基准没有达到时，经理们就会使用这些披露。采用国际财务报告准则(IFRS)后机会性非公认会计准则披露的边际减少表明采用国际财务报告准则后报告行为几乎没有变化。我们的研究结果表明，经理人披露的非公认会计准则措施是出于薪酬动机的机会主义意图，并指出监管机构需要制定有关明确调节标准的政策。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

求助全文

约1分钟内获得全文求助全文

来源期刊

International Journal of Accounting BUSINESS, FINANCE-

CiteScore

1.20

自引率

0.00%

发文量

期刊介绍： The aim of The International Journal of Accounting is to advance the academic and professional understanding of accounting theory, policies and practice from the international perspective and viewpoint. The Journal editorial recognizes that international accounting is influenced by a variety of forces, e.g., governmental, political and economic. Thus, the primary criterion for manuscript evaluation is the incremental contribution to international accounting literature and the forces that impact the field. The Journal aims at understanding the present and potential ability of accounting to aid in analyzing and interpreting international economic transactions and the economic consequences of such reporting. These transactions may be within a profit or non-profit environment. The Journal encourages a broad view of the origins and development of accounting with an emphasis on its functions in an increasingly interdependent global economy. The Journal also welcomes manuscripts that help explain current international accounting practices, with related theoretical justifications, and identify criticisms of current policies and practice. Other than occasional commissioned papers or special issues, all the manuscripts published in the Journal are selected by the editors after the normal double-blind refereeing process.