Economic Policy Uncertainty and Firms’ Non-Gaap Reporting
Bibliographic Data
| ID | 19447296 |
|---|---|
| Authors | Xia Chen (0000-0001-8463-2774, Zhongnan University of Economics and Law), Xuejun Jiang (0000-0001-5861-5452, University of Sussex), Louise Yi Lu (0000-0002-5383-4303, Australian National University), Yangxin Yu (0000-0002-9106-4733, City University of Hong Kong, corresponding author) |
| Year | 2024 |
| Volume | 33 |
| Issue | 5 |
| Pages | 1723-1746 |
| Publication date | 2024-10-19 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | European Accounting Review (JOURNAL) |
| Journal identifiers | ISSN: 0963-8180 • E-ISSN: 1468-4497 |
| Publisher | Informa UK Limited (PUBLISHER • GB) |
| DOI | 10.1080/09638180.2024.2368721 |
| OpenAlex | W4400665915 |
| Language | EN |
| References cited | 82 |
Using the US economic policy uncertainty (EPU) index developed by Baker, S. R., Bloom, N., & Davis, S. J. [2016. Measuring economic policy uncertainty. The Quarterly Journal of Economics, 131(4), 1593–1636. https://doi.org/10.1093/qje/qjw024], we examine the impact of policy uncertainty on firms’ non-GAAP reporting practices. We show that EPU increases both the likelihood and quality of non-GAAP earnings disclosures. These effects are more pronounced for firms with higher index ownership and for those with less informative GAAP earnings. Furthermore, we show that non-GAAP disclosures provide tangible economic benefit during periods of increasing EPU, including compensating for the reduced informativeness of GAAP earnings and reducing information asymmetry. Overall, our evidence suggests that non-GAAP reporting is a means by which managers communicate value-relevant information about their firms’ performance to investors during periods of high EPU
Business · Economics · Auditing, Earnings Management, Governance · Financial Markets and Investment Strategies · Market Dynamics and Volatility · Accounting
| Citation velocity | historical |
|---|---|
| Highly cited | No |