Page 231 - 34-2

+
+
+
+
+
+
+
+
+
+
.
,
. ,
,
,
NTU Management Review Vol. 34 No. 2 Aug. 2024
+ ∝
+ ∝
∝ + ∝
= = ∝ + ∝ + ∝ + ∝
+∝
+ ∝
+ ∝
+ ∝
+ ∝ +∝ + ∝ + ∝
+ ∝
+ ∝
+ ∝ , + ∝ , , , ., . (2)
,
In equation (2), NonGAAP is an indicator that equals 1 if the firm discloses a non-
GAAP earnings metric in earnings press releases (Bentley, Christensen, Gee, and Whipple,
2018) and 0 otherwise. Post is an indicator that equals 1 for years after 2010 (inclusive),
when the SEC implemented C&DIs, and 0 otherwise. Our main variable of interest is the
interaction term NonGAAP × Post, and H1 predicts that α < 0.
3
To test H2, we estimate the following equation:
× ×

+ +
+ +
+ +
, , (3)

where MBEPCT represents the percentage of quarterly earnings that meets or beats
analysts’ earnings forecasts (actual earnings less analysts’ forecast earnings between 0 and
0.03) during the year. The key test variable in equation (3) is OppSI × NonGAAP × Post.

According to the prediction of H2, we expect that β < 0.
3
Our sample starts from 55,983 firm-years available in the Compustat database during
2007-2012. After we exclude firms with missing values required to calculate regression

variables, the final sample consists of 29,494 observations for the test of H1 and 17,366
observations for the test of H2.

3. Findings

Consistent with our expectations, relative to firms that do not disclose non-GAAP
earnings, firms reporting non-GAAP earnings significantly reduce the recognition of
opportunistic special items after the implementation of C&DIs. We also find evidence

supporting H2 that, following the release of C&DIs, firms disclosing non-GAAP earnings

223