Conditional conservatism in GAAP earnings and the implications for the disclosure of non-GAAP earnings

Brandon D. Ater, Emre Kilic, Christian K. Sobngwi

Producción científica: Articlerevisión exhaustiva

Resumen

This study explores the relationship between the level of conditional conservatism in GAAP earnings and a company's choice to disclose non-GAAP earnings. Conditional conservatism tends to lower GAAP earnings and potentially reduces their information value. However, previous research has shown that non-GAAP earnings are more persistent and informative than GAAP earnings. Therefore, companies may opt to disclose non-GAAP earnings to bypass the constraints imposed by conditional conservatism. The findings support a positive link between the degree of conditional conservatism in GAAP earnings and a company's decision to disclose non-GAAP earnings. Additionally, there is evidence of a positive connection between the extent of conditional conservatism in GAAP earnings and the magnitude and frequency of non-GAAP disclosures.
Idioma originalEnglish
Número de artículo100686
PublicaciónAdvances in Accounting
Volumen66
DOI
EstadoAccepted/In press - 2023

ASJC Scopus Subject Areas

  • Accounting
  • Finance

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