Dissertations, Theses, and Capstone Projects
Date of Degree
6-2022
Document Type
Dissertation
Degree Name
Ph.D.
Program
Business
Advisor
Carol Marquardt
Committee Members
Donal Byard
Kalin Kolev
Armen Hovakimian
Subject Categories
Accounting
Keywords
Non-GAAP Earnings, Economic Policy Uncertainty, Corporate Disclosure
Abstract
This study investigates the impact of economic policy uncertainty (EPU) on non-GAAP reporting. Prior research documents that numerous factors influence the frequency and quality of non-GAAP earnings disclosures, but the expected association between EPU and non-GAAP reporting is unclear. On the one hand, greater EPU may increase investor demand for additional financial information, while on the other hand, more EPU may lead to less non-GAAP disclosure by making core or recurring earnings more difficult to predict. Additionally, greater EPU may provide increased opportunity for managers to use non-GAAP reporting to mislead investors. I document a significantly positive association, on average, between EPU and the frequency and quality of non-GAAP earnings disclosure, consistent with managers using non-GAAP disclosures to better inform investors when faced with greater EPU. Cross-sectional tests confirm that these results are stronger for firms more likely to be affected by EPU, such as government contractors. In addition, supplemental tests reveal variation across EPU components; specifically, increased tax policy uncertainty is associated with decreased quality of non-GAAP reporting for the most aggressive tax reporters. This study deepens our understanding of the economic factors driving non-GAAP reporting, a phenomenon which continues to grow more prevalent over time.
Recommended Citation
Wynne, Ryan H., "Economic Policy Uncertainty and Non-GAAP Reporting" (2022). CUNY Academic Works.
https://academicworks.cuny.edu/gc_etds/4791