Lo, S. Y., Chen, I. L., Chen, H. C., and Liu, Y. Z. 2025. The Impact of Economic Policy Uncertainty on Non-GAAP Earnings’ Quality. NTU Management Review, 35 (1): 1-44. https://doi.org/10.6226/NTUMR.202504_35(1).0004
Sheng-Yi Lo, Department of Finance, National Sun Yat-sen University
I-Lin Chen, Department of Accounting, Providence University
Han-Chung Chen, Department of Accountancy, National Taipei University
Yun-Zhu Liu, Deloitte & Touche Taiwan
Abstract
This study investigates the role of economic policy uncertainty (EPU) in the relation between the special item (SPI) recognition and the voluntary non-GAAP earning disclosure, and EPU’s effect on the exclusion quality. By examining a sample of US listed firms ranging from 2003 to 2017, we find that (1) the incremental relation between the SPI recognition and the likelihood of voluntary disclosure of non-GAAP earnings is positive under higher EPU; (2) the relation between EPU and the exclusion quality is positive for firms with voluntary disclosures of non-GAAP earnings; (3) firms exclude more SPIs under higher EPU. In addition, the monitoring role of analysts makes the positive effect of EPU on exclusion quality stronger. Finally, the incremental relationship between the voluntary non-GAAP earning disclosure and information asymmetry is negative under higher EPU. These findings sustain the informative motive for non-GAAP earnings disclosure.
Keywords
economic policy uncertaintyvoluntary disclosurenon-GAAP earningsspecial itemexclusion quality