The Effect of Voluntary Clawback Adoption on Non-GAAP Reporting
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AbstractWe examine the effect of voluntary adoption of clawback provisions on non-GAAP earnings disclosures. Prior literature documents that voluntary clawback adoption improves financial reporting quality by increasing the costs of misstating GAAP earnings. However, managers may respond to perceptions of reduced discretion over GAAP reporting by increasing their reliance on non-GAAP earnings disclosures. Using a propensity score matched sample, we find that non-GAAP earnings disclosure frequency increases and non-GAAP exclusion quality decreases after clawback adoption, consistent with a more opportunistic use of non-GAAP reporting. Additional cross-sectional tests help support this interpretation.
Acceptance Date17/09/2018
All Author(s) ListHangsoo KYUNG, Hakying LEE, Carol MARQUARDT
Journal nameJournal of Accounting and Economics
Year2019
Month2
Volume Number67
Issue Number1
PublisherElsevier B.V.
Pages175 - 201
ISSN0165-4101
eISSN1879-1980
LanguagesEnglish-United States
KeywordsClawbacks, Corporate governance, Non-GAAP earnings, Earnings quality, Dodd-Frank

Last updated on 2021-07-05 at 01:12