Date of Degree


Document Type


Degree Name





Joseph Weintrop


Carol Marquardt

Subject Categories



Clawback, Earnings Management, Non-GAAP, Pro forma, Regulation, Voluntary Disclosure


Essay1: The U.S. Securities and Exchange Commission (SEC) issued new Compliance and Disclosure Interpretations (CDI) in 2010, relaxing enforcement of Regulation G and Regulation S-K. The nonbinding nature and opaque procedures behind interpretive guidance cast doubt as to whether SEC staff interpretations changed a firm's voluntary disclosure. In this paper, I find that firms more frequently disclose non-GAAP earnings after the issuance of new CDI, suggesting that nonbinding SEC staff interpretations influence corporate disclosure practice. Compared to the pre-CDI period, non-GAAP exclusions are of higher quality in the post-CDI period. The exclusion quality of firms who started to disclose non-GAAP earnings in the post-CDI period is of higher than that of firm who frequently disclose non-GAAP earnings in both the pre- and post-CDI periods. These results suggest that relaxed interpretive guidance of non-GAAP regulations reduced the cost of non-opportunistic disclosure, resulting in more frequent and higher quality non-GAAP earnings disclosures in the post-CDI period. In addition, I find that such a relation exists among firms with high corporate board independence. Consistent with higher non-GAAP exclusion quality in the post-CDI period, the frequency of exceeding analyst forecasts using positive exclusions is lower in the post-CDI period. This paper contributes to the voluntary disclosure and regulation literatures by providing empirical evidence that SEC interpretative guidance is effective in shaping firms' disclosure practices, and that relaxed guidance both expanded the disclosure and improved the quality of accounting information.

Essay 2: In this paper, I examine the effect of voluntary adoption of clawback provision on non-GAAP earnings disclosures. The extant literature documents that the voluntary adoption of clawback provisions improves financial reporting quality by increasing the costs of misstating GAAP earnings. However, managers may respond to perception of reduced discretion over GAAP reporting by increasing their reliance on non-GAAP earnings disclosures. I find that managers more frequently disclose non-GAAP earnings after the voluntary adoption of clawback provisions, relative to a propensity-matched sample of control firms. In addition, I find that the quality of non-GAAP earnings exclusions deteriorates after voluntarily adopting clawbacks, consistent with a more opportunistic use of non-GAAP reporting. My results extend the growing literature on clawback adoption and suggest that the improvement in GAAP reporting quality associated with clawbacks may be achieved at the expense of deterioration in the quality of non-GAAP earnings. This unintended consequence has implications related to the mandatory adoption of clawbacks required under the Dodd-Frank Act of 2010.

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