Dissertation/Thesis Abstract

Managerial reputation and non-GAAP earnings disclosures
by Cheng, Yun, Ph.D., Florida Atlantic University, 2014, 108; 3647568
Abstract (Summary)

I examine how managerial reputation affects the quality of non-GAAP earnings disclosures and how the market reacts to non-GAAP earnings disclosures associated with managerial reputation. Although there was an initial dip in the frequency of non-GAAP earnings disclosures after SOX and Regulation G, the frequency of non-GAAP earnings disclosures has increased in recent years (Brown, Christensen, Elliott and Mergenthaler 2012). Motivated by the efficient contracting theory and managerial reputation incentives, I investigate whether reputable managers are associated with higher quality non-GAAP earnings disclosures. I also investigate whether the market is more responsive to non-GAAP earnings disclosed by reputable managers. Using empirical models modified from prior research, I find that reputable managers are less likely to disclose non-GAAP earnings, which is consistent with the efficient contracting explanation. I also find that reputable managers exclude more recurring items that are related to future operating earnings when they disclose non-GAAP earnings, which is consistent with the rent extraction explanation in prior research. Finally, I find that managerial reputation has an incremental effect on the market reaction and that the market is more responsive to non-GAAP earnings disclosed by reputable managers if the unexpected earnings are positive. The study contributes to both non-GAAP earnings disclosures literature and managerial reputation incentives literature. It also has implications for investors, managers, and regulators.

Indexing (document details)
Advisor: Kohlbeck, Mark
Commitee:
School: Florida Atlantic University
Department: Accounting
School Location: United States -- Florida
Source: DAI-A 76/04(E), Dissertation Abstracts International
Source Type: DISSERTATION
Subjects: Accounting
Keywords: GAAP, Managerial reputation, Non-GAAP disclosures, Non-GAAP earnings
Publication Number: 3647568
ISBN: 9781321404050
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