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The last article “The Effect of SEC’s Comment Letters on the Comparability of
Non-GAAP Earnings” in the field of accounting by Yen, Lo, Liu, and Yu looks into a
phenomenon that the SEC and IASB have expressed concerns—the widespread use of
non-GAAP earnings, which may lead to the lack of comparability of non-GAAP earnings
due to the unclear definition of non-GAAP disclosure. The vagueness can also influence
the communication between information users and companies. Because the SEC uses
comment letters to monitor filers’ disclosure, the research then focuses on investigating
whether those receiving the SEC comment letters would improve their comparability of
non-GAAP earnings. The empirical results show that after a company received non-GAAP
related comment letters, the comparability of its non-GAAP earnings increases while the
analysts’ earnings forecast error and dispersion decrease.
Hsiou-Wei Lin
San-Lin Chung
Chih-Ping Wei