Industry Competition and non-GAAP disclosures

Isidro, Helena and Marques, Ana (2020) Industry Competition and non-GAAP disclosures. Accounting and Business Research. ISSN 0001-4788

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Abstract

We examine the role of industry-level product market competition on non-GAAP disclosure decisions. We consider traditional measures of industry competition (concentration, price-cost margin, and set up costs), and large reductions in import tariff rates that identify an exogenous increase in competition. We find that competition intensity influences the likelihood of non-GAAP disclosure and the magnitude of non-GAAP exclusions. Our evidence suggests that strong competition encourages managers to disclose higher non-GAAP earnings. However, when competition is strong, firms with low performance relatively to the industry exclude smaller amounts. We also find that in competitive environments, managers are more likely to provide reconciliations and are less likely to exclude recurring items that are commonly excluded by other firms in the industry. These findings indicate that industry competition has a positive influence on the transparency of non-GAAP disclosures.

Item Type: Article
Uncontrolled Keywords: alternative performance measures,financial performance,industry concentration,non-ifrs earnings,proforma earnings,proprietary costs,accounting ,/dk/atira/pure/subjectarea/asjc/1400/1402
Faculty \ School: Faculty of Social Sciences > Norwich Business School
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Depositing User: LivePure Connector
Date Deposited: 12 Aug 2020 23:53
Last Modified: 25 Aug 2020 23:59
URI: https://ueaeprints.uea.ac.uk/id/eprint/76402
DOI: 10.1080/00014788.2020.1798209

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