Non Gaap Reporting

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Reporting Non-GAAP Financial Measures

Author : Nicola Moscariello
Publisher : Cambridge Scholars Publishing
ISBN 13 : 1527543978
Total Pages : 420 pages
Book Rating : 4.5/5 (275 download)

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Book Synopsis Reporting Non-GAAP Financial Measures by : Nicola Moscariello

Download or read book Reporting Non-GAAP Financial Measures written by Nicola Moscariello and published by Cambridge Scholars Publishing. This book was released on 2019-11-25 with total page 420 pages. Available in PDF, EPUB and Kindle. Book excerpt: The use of alternative performance indicators (APMs) (also known as ‘Non-GAAP’ earnings) is a widespread phenomenon, and the increased reliance on APMs has recently triggered a strong debate among regulators, managers and investors on the nature of these ‘tailored’ earnings and on the economic reasons behind them. On one hand, APMs might reflect managers’ attempt to offer useful information to predict companies’ future sustainable cash-flows and earnings (information hypothesis), while, on the other, the non-standardized nature of these metrics impacts on the comparability of the financial results, and reduces the reliability and the faithful representation of financial information (opportunistic hypothesis). By collecting several theoretical and empirical contributions on APMs, this book provides a number of interesting and useful insights on the economics of APMs and their impact on financial markets.

Reporting Non-GAAP Financial Measures

Author : Nicola Moscariello
Publisher :
ISBN 13 : 9781527570160
Total Pages : pages
Book Rating : 4.5/5 (71 download)

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Book Synopsis Reporting Non-GAAP Financial Measures by : Nicola Moscariello

Download or read book Reporting Non-GAAP Financial Measures written by Nicola Moscariello and published by . This book was released on 2021-08 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The use of alternative performance indicators (APMs) (also known as 'Non-GAAP' earnings) is a widespread phenomenon, and the increased reliance on APMs has recently triggered a strong debate among regulators, managers and investors on the nature of these 'tailored' earnings and on the economic reasons behind them. On one hand, APMs might reflect managers' attempt to offer useful information to predict companies' future sustainable cash-flows and earnings (information hypothesis), while, on the other, the non-standardized nature of these metrics impacts on the comparability of the financial results, and reduces the reliability and the faithful representation of financial information (opportunistic hypothesis). By collecting several theoretical and empirical contributions on APMs, this book provides a number of interesting and useful insights on the economics of APMs and their impact on financial markets.

Transparency and consistency of non-GAAP reporting across Europe

Author : Christoph Beis
Publisher : GRIN Verlag
ISBN 13 : 3346712443
Total Pages : 47 pages
Book Rating : 4.3/5 (467 download)

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Book Synopsis Transparency and consistency of non-GAAP reporting across Europe by : Christoph Beis

Download or read book Transparency and consistency of non-GAAP reporting across Europe written by Christoph Beis and published by GRIN Verlag. This book was released on 2022-09-01 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: Bachelor Thesis from the year 2017 in the subject Economics - Finance, grade: 1,0, University of Mannheim, language: English, abstract: Non-Generally Accepted Accounting Principles (non-GAAP) measures are figures that are not legally defined as opposed to GAAP measures which are specified by the laws of every country in order to ensure a true and fair view. The European non-GAAP disclosures will be examined with respect to transparency and consistency across companies, countries and time horizons. The thesis will point out the ambiguous character of non-GAAP reporting, being both informative and opportunistic. The carried out sample studies of European firms previous findings that non-GAAP reporting is a common procedure in Europe and that usage varies across European countries and industries. Moreover, it extends existing literature by showing that measures even vary within the same industry and over time and that individual factors, such as the variable pay determination of executives, might be explanatory factors for the usage of non-GAAP figures.

Non-GAAP Reporting and Accounting Restatement

Author : Shin-Rong Shiah-Hou
Publisher :
ISBN 13 :
Total Pages : 29 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Non-GAAP Reporting and Accounting Restatement by : Shin-Rong Shiah-Hou

Download or read book Non-GAAP Reporting and Accounting Restatement written by Shin-Rong Shiah-Hou and published by . This book was released on 2018 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study, I examine whether disclosing Non-GAAP earnings is a signal of experiencing accounting restatement. I propose a scenario in which earnings are managed within the constraints of GAAP guidelines, as long as there is sufficient leeway to permit income-increasing accounting choices. Managers usually avoid issuing Non-GAAP earnings because of severe penalties. If this becomes no longer possible within GAAP earning management, managers have incentives to cross the line into Non-GAAP territory. At this point, disclosing Non-GAAP earnings is positively associated with accounting restatement because of the great magnitude of earnings management. I find that firms with restatements experience a significant increase in the relative use of disclosing Non-GAAP earnings with positive other exclusions. Firms with the positive other exclusions excluded from Non-GAAP earnings may exhibit increased likelihood of fraud or core-earnings restatement. Finally, firms disclosing Non-GAAP earnings and having high accounting complexity are more likely to restate than those disclosing Non-GAAP earnings and having low accounting complexity.

Non-GAAP Reporting

Author : Konstantin Grün
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (111 download)

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Book Synopsis Non-GAAP Reporting by : Konstantin Grün

Download or read book Non-GAAP Reporting written by Konstantin Grün and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study attempts to enhance understanding regarding the impact of Non-GAAP reporting on the trading behaviour of sophisticated and non-sophisticated investors. For this purpose, the study analyses whether prior research findings concerning disclosure of Non-GAAP EPS and its effect on sophisticated and non-sophisticated investors are still relevant today. In addition, the role of alternative Non-GAAP measures is explored in this context. The alternative Non-GAAP measures that are addressed in this study are passenger load factor, revenue per passenger mile and cost per available seat mile in the airline industry, and value of backlog as well as value of new orders in the homebuilding industry. To test whether findings of prior research are still pertinent, a cross-sectional sample consisting of 4915 quarterly observations concerning Non-GAAP EPS disclosures from 2013-2014 is collected by hand. Two smaller additional cross-sectional samples are collected to investigate the impact of alternative Non-GAAP measures in the homebuilding and airline industries from 2013-2016. Most findings of this study suggest that non-sophisticated investors are more likely to rely on Non-GAAP information than sophisticated investors. However, it is argued that one should be cautious about making overreaching statements concerning Non-GAAP disclosure in general, as has been done by prior research, since not all Non-GAAP figures, such as the passenger load factor in the airline industry, affect the distinguished investor groups differently in their trading behaviour. Furthermore, depending on the context of the Non-GAAP to the related GAAP figures, sophisticated investors may in fact be more likely to rely on Non-GAAP information.

The RISE and RISE of NON-GAAP DISCLOSURE

Author : Jeff Coulton
Publisher :
ISBN 13 : 9780994369734
Total Pages : pages
Book Rating : 4.3/5 (697 download)

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Book Synopsis The RISE and RISE of NON-GAAP DISCLOSURE by : Jeff Coulton

Download or read book The RISE and RISE of NON-GAAP DISCLOSURE written by Jeff Coulton and published by . This book was released on 2016-11-24 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

The End of Accounting and the Path Forward for Investors and Managers

Author : Baruch Lev
Publisher : John Wiley & Sons
ISBN 13 : 1119191084
Total Pages : 268 pages
Book Rating : 4.1/5 (191 download)

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Book Synopsis The End of Accounting and the Path Forward for Investors and Managers by : Baruch Lev

Download or read book The End of Accounting and the Path Forward for Investors and Managers written by Baruch Lev and published by John Wiley & Sons. This book was released on 2016-06-14 with total page 268 pages. Available in PDF, EPUB and Kindle. Book excerpt: An innovative new valuation framework with truly useful economic indicators The End of Accounting and the Path Forward for Investors and Managers shows how the ubiquitous financial reports have become useless in capital market decisions and lays out an actionable alternative. Based on a comprehensive, large-sample empirical analysis, this book reports financial documents' continuous deterioration in relevance to investors' decisions. An enlightening discussion details the reasons why accounting is losing relevance in today's market, backed by numerous examples with real-world impact. Beyond simply identifying the problem, this report offers a solution—the Value Creation Report—and demonstrates its utility in key industries. New indicators focus on strategy and execution to identify and evaluate a company's true value-creating resources for a more up-to-date approach to critical investment decision-making. While entire industries have come to rely on financial reports for vital information, these documents are flawed and insufficient when it comes to the way investors and lenders work in the current economic climate. This book demonstrates an alternative, giving you a new framework for more informed decision making. Discover a new, comprehensive system of economic indicators Focus on strategic, value-creating resources in company valuation Learn how traditional financial documents are quickly losing their utility Find a path forward with actionable, up-to-date information Major corporate decisions, such as restructuring and M&A, are predicated on financial indicators of profitability and asset/liabilities values. These documents move mountains, so what happens if they're based on faulty indicators that fail to show the true value of the company? The End of Accounting and the Path Forward for Investors and Managers shows you the reality and offers a new blueprint for more accurate valuation.

Non-GAAP Reporting and Investment

Author : Charles McClure
Publisher :
ISBN 13 :
Total Pages : 57 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Non-GAAP Reporting and Investment by : Charles McClure

Download or read book Non-GAAP Reporting and Investment written by Charles McClure and published by . This book was released on 2019 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: GAAP earnings often contain transitory items that can distort firms' investment decisions when a manager cares about his firm's stock price. Non-GAAP earnings can alleviate investment distortions because they allow the manager to remove transitory items. In addition to removing transitory items, the manager can also opportunistically bias non-GAAP earnings. We quantify this trade-off by estimating a dynamic model in which the manager makes an investment and a non-GAAP disclosure decision, and where the stock market rationally anticipates the manager's incentives. The estimated parameters suggest managers care about stock prices significantly more than fundamentals. In the estimated model, investment and non-GAAP disclosure serve as complements. Because of that, relative to a scenario where managers can only provide GAAP earnings, managers who can provide non-GAAP earnings increase investment, but do so opportunistically. We find that permitting bias in non-GAAP earnings creates inefficient investment choices and destroys firm value. We estimate the magnitude of the loss in the firm value at 57 basis-points.

Litigation Risk and the Regulation of Non-GAAP Reporting

Author : Richard A. Cazier
Publisher :
ISBN 13 :
Total Pages : 48 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Litigation Risk and the Regulation of Non-GAAP Reporting by : Richard A. Cazier

Download or read book Litigation Risk and the Regulation of Non-GAAP Reporting written by Richard A. Cazier and published by . This book was released on 2019 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: The SEC has recently raised renewed concerns about firms' reporting of adjusted (non-GAAP) earnings metrics. Regulators have significant interest in understanding the factors that help constrain non-GAAP reporting. We first provide evidence on the relation between securities litigation risk and firms' propensity to report non-GAAP earnings. We then provide evidence on how this relation is moderated by the regulation of non-GAAP disclosure under Reg G. Using a plausibly exogenous litigation shock based on a U.S. circuit court ruling, we find a robust negative relation between litigation risk and non-GAAP reporting prior to the passage of Reg G. This negative relation suggests that, in the absence of rules-based regulation of non-GAAP reporting, litigation risk helps to constrain non-GAAP disclosure. However, our evidence suggests that the subsequent regulation of non-GAAP disclosure has decreased the sensitivity of non-GAAP disclosure to litigation risk. Specifically, we find that differences in non-GAAP reporting across judicial circuits are diminished and the negative association between litigation risk and non-GAAP reporting is significantly attenuated following the implementation of Reg G. Our results are consistent with claims that Reg G has had the unintended consequence of shielding firms' non-GAAP disclosures from litigation risk by creating a de facto “safe harbor” for non-GAAP disclosure. Finally, we use our quasi-natural-experimental setting to validate a new proxy for circuit-specific litigation risk that future researchers can employ in any setting.

Small Cap Financial Reporting

Author : Linda Campbell
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Small Cap Financial Reporting by : Linda Campbell

Download or read book Small Cap Financial Reporting written by Linda Campbell and published by . This book was released on 2017 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the determinants of emphasis on non-GAAP disclosures in the earnings announcements of small cap companies. Two proxies of non-GAAP information emphasis are investigated -- placement of the first non-GAAP disclosure and placement of the non-GAAP to GAAP reconciliation required by Regulation G. Using hand-collected data from fourth quarter press releases, we find evidence indicating that small cap firms place a higher level of emphasis on non-GAAP financial measures when GAAP earnings suggest lower value-relevance and when their shares are owned by a higher proportion of institutional investors. We also find that small cap companies decrease the level of emphasis placed on non-GAAP information as their listing tenure increases.

The Pitfalls of Non-GAAP Metrics

Author : H. David Sherman
Publisher :
ISBN 13 :
Total Pages : 7 pages
Book Rating : 4.:/5 (11 download)

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Book Synopsis The Pitfalls of Non-GAAP Metrics by : H. David Sherman

Download or read book The Pitfalls of Non-GAAP Metrics written by H. David Sherman and published by . This book was released on 2017 with total page 7 pages. Available in PDF, EPUB and Kindle. Book excerpt: For decades, companies have used custom metrics that don't conform to generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS) as supplements to their official financial statements. Some common non-GAAP measures include adjusted earnings before interest, taxes, depreciation, and amortization (known as adjusted EBITDA), free cash flow, funds from operations, adjusted revenues, adjusted earnings, adjusted earnings per share, and net debt. However, as the authors point out, it's not unusual for these alternative measures to lead to problems. Since companies devise their own methods of calculation, it's difficult to compare the metrics from company to company - or, in many cases, from year to year within the same company. According to the authors, alternative measures, once used fairly sparingly and shared mostly with a small group of professional investors, have become more ubiquitous and further and further disconnected from reality. In 2013, McKinsey and Company found that all of the 25 largest U.S.-based nonfinancial companies reported some form of non-GAAP earnings. Press releases and earnings-call summaries often present non-GAAP measures that are increasingly detached from their GAAP-based equivalents. In addition to creating potential problems for investors, the authors argue, alternative metrics can harm companies themselves by obscuring their financial health, overstating their growth prospects beyond what standard GAAP measures would support, and rewarding executives beyond what is justified. Board members, top executives, compliance officers, and corporate strategists need to make sure that whatever alternative measures companies use improve transparency and reduce bias in financial reports. Although no standard is perfect, the authors note that GAAP and IFRS standards provide a foundation for consistent measurement of corporate performance over time and across businesses.

Disentangling Managers' and Analysts' Non-GAAP Reporting

Author : Jeremiah W. Bentley
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Disentangling Managers' and Analysts' Non-GAAP Reporting by : Jeremiah W. Bentley

Download or read book Disentangling Managers' and Analysts' Non-GAAP Reporting written by Jeremiah W. Bentley and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Researchers frequently proxy for managers' non-GAAP disclosures using performance metrics available through analyst forecast data providers (FDPs), such as I/B/E/S. The extent to which FDP-provided earnings are a valid proxy for managers' non-GAAP reporting, however, has been debated extensively. We explore this important question by creating the first large-sample data set of managers' non-GAAP earnings disclosures, which we directly compare to I/B/E/S data. Although we find a substantial overlap between the two data sets, we also find that they differ in systematic ways because I/B/E/S (1) excludes managers' lower quality non-GAAP numbers and (2) sometimes provides higher quality non-GAAP measures that managers do not explicitly disclose. Our results indicate that using I/B/E/S to identify managers' non-GAAP disclosures significantly underestimates the aggressiveness of their reporting choices. We encourage researchers interested in managers' non-GAAP reporting to use our newly available data set of manager-disclosed non-GAAP metrics because it more accurately captures managers' reporting choices.

The Circumstances and Legal Consequences of Non-Gaap Reporting

Author : Zoe-Vonna Palmrose
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)

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Book Synopsis The Circumstances and Legal Consequences of Non-Gaap Reporting by : Zoe-Vonna Palmrose

Download or read book The Circumstances and Legal Consequences of Non-Gaap Reporting written by Zoe-Vonna Palmrose and published by . This book was released on 2003 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Our study examines the circumstances of non-GAAP financial reporting by 492 U.S. companies that announced restatements from 1995 to 1999. We analyze the occurrence and resolution of litigation over restatements; and, we explore the role of accounting items in bringing and resolving this litigation. To do so, we focus on the income statement. We provide evidence on the nature and pervasiveness of accounting misstatements and how, if at all, they affect litigation. We assess the nature of restatements by whether normal, recurring earnings from primary perations (core) or other components of earnings (non-core) are misstated and their pervasiveness by estimating the number of primary accounts misstated. In our sample, companies with core restatements have higher frequencies for intentional misstatements (fraud) and subsequent bankruptcy or delisting. They likewise have, on average, more material misstatements, more negative security price reactions to restatement announcements, and more negative security price changes over the six months preceding and following restatement announcements. However, controlling for these and other factors, we find a significant association between accounting items and litigation, whether occurrences or resolutions. Specifically, core restatements - driven primarily by revenue misstatements, a component of core earnings - and more pervasive restatements each play a role, while misstatements of non-core earnings alone do not.

The Three-Box Solution

Author : Vijay Govindarajan
Publisher : Harvard Business Review Press
ISBN 13 : 1633690156
Total Pages : 256 pages
Book Rating : 4.6/5 (336 download)

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Book Synopsis The Three-Box Solution by : Vijay Govindarajan

Download or read book The Three-Box Solution written by Vijay Govindarajan and published by Harvard Business Review Press. This book was released on 2016-04-26 with total page 256 pages. Available in PDF, EPUB and Kindle. Book excerpt: How to Innovate and Execute Leaders already know that innovation calls for a different set of activities, skills, methods, metrics, mind-sets, and leadership approaches. And it is well understood that creating a new business and optimizing an already existing one are two fundamentally different management challenges. The real problem for leaders is doing both, simultaneously. How do you meet the performance requirements of the existing business—one that is still thriving—while dramatically reinventing it? How do you envision a change in your current business model before a crisis forces you to abandon it? Innovation guru Vijay Govindarajan expands the leader’s innovation tool kit with a simple and proven method for allocating the organization’s energy, time, and resources—in balanced measure—across what he calls “the three boxes”: • Box 1: The present—Manage the core business at peak profitability • Box 2: The past—Abandon ideas, practices, and attitudes that could inhibit innovation • Box 3: The future—Convert breakthrough ideas into new products and businesses The three-box framework makes leading innovation easier because it gives leaders a simple vocabulary and set of tools for managing and measuring these different sets of behaviors and activities across all levels of the organization. Supported with rich company examples—GE, Mahindra & Mahindra, Hasbro, IBM, United Rentals, and Tata Consultancy Services—and testimonies of leaders who have successfully used this framework, this book solves once and for all the practical dilemma of how to align an organization on the critical but competing demands of innovation.

Two Essays on Non-GAAP Reporting

Author : Dongfang Nie
Publisher :
ISBN 13 :
Total Pages : 86 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Two Essays on Non-GAAP Reporting by : Dongfang Nie

Download or read book Two Essays on Non-GAAP Reporting written by Dongfang Nie and published by . This book was released on 2019 with total page 86 pages. Available in PDF, EPUB and Kindle. Book excerpt: This dissertation investigates the interrelationships between a client's non-GAAP earnings disclosures, financial health (profit and loss status), and the external auditor's assessment of the client's going concern status. This dissertation comprises two essays. Essay 1 examines the informativeness and the quality of non-GAAP earnings disclosures in profit and loss firms separately. Using a large sample of non-GAAP earnings voluntarily disclosed by managers, I find that the informativeness and the quality of non-GAAP earnings vary in firms cross-classified by GAAP loss status and non-GAAP loss status. I also find that loss firms have higher quality non-GAAP exclusions relative to profit firms, although the expenses excluded by both profit and loss firms are associated with firms' future performance. Further, I posit and find that profit firms which voluntarily disclose non-GAAP losses have high-quality exclusions, while other non-GAAP reporting profit firms have low-quality exclusions. Having found that non-GAAP earnings in loss firms is opportunistic to some extent, I next study, in Essay 2, whether auditors understand the implications of low-quality non-GAAP reporting in these firms. Specifically, I examine 1) whether non-GAAP earnings disclosures are associated with the propensity of the auditor's going concern issuance to loss firms, and 2) whether non-GAAP earnings disclosures affect the accuracy of the auditor's going concern assessment. This is important because auditors often conduct audits of loss firms that disclose non-GAAP earnings, and the consequences of issuing wrong audit opinions can be severe. I find that the propensity of the auditor's going concern issuance is negatively associated with the magnitude of expense exclusions in loss firms, after controlling for determinants of going concern opinions that are derived from GAAP earnings. This finding suggests that auditors take into account information embedded in non-GAAP earnings when assessing clients' going concern status. Using bankruptcy outcome as a benchmark, I find that non-GAAP earnings disclosures could increase type II errors in auditors' going concern reporting. I further find that small size auditors and non-specialist auditors are more likely to be misled by non-GAAP reporting when making going concern decisions. In sum, my dissertation furthers our understanding of non-GAAP reporting and its implication for auditors' decision making for issuing going concern opinions.

Auditing Non-GAAP Measures

Author : Spencer B. Anderson
Publisher :
ISBN 13 :
Total Pages : 49 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Auditing Non-GAAP Measures by : Spencer B. Anderson

Download or read book Auditing Non-GAAP Measures written by Spencer B. Anderson and published by . This book was released on 2020 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: Many companies regularly disclose non-GAAP performance measures to communicate firm-specific information that does not fit within the mold of GAAP reporting. However, these non-GAAP measures may have low information content or even be misleading to investors. Thus, some question whether auditors should play a role in the reporting of non-GAAP measures, which currently are not audited. We run an experiment to provide ex ante evidence on the effect of auditing non-GAAP measures. Specifically, we present investor participants with a non-GAAP measure that is either more useful (should be used when making investment judgments) or less useful (should not be used when making investment judgments) and is either audited or is not audited. We find that, when participants view a non-GAAP measure that is more useful, they appropriately use the non-GAAP measure in their investment-related judgments, regardless of whether the measure is audited. However, we find that, while participants appropriately do not use a less useful non-GAAP measure when it is not audited, participants inappropriately do use the less useful non-GAAP measure in their investment-related judgments when it is audited. Mediation results provide evidence consistent with audits increasing investors' reliance on non-GAAP measures when they are less useful. Overall, our results are consistent with audits of non-GAAP measures signaling more than is intended and have implications for regulators regarding the role of auditors in non-GAAP reporting.

SEC Scrutiny and the Evolution of Non-GAAP Reporting

Author : Kalin S. Kolev
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis SEC Scrutiny and the Evolution of Non-GAAP Reporting by : Kalin S. Kolev

Download or read book SEC Scrutiny and the Evolution of Non-GAAP Reporting written by Kalin S. Kolev and published by . This book was released on 2007 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We empirically examine the effects of intensified scrutiny over non-GAAP reporting on the quality of non-GAAP earnings exclusions. We find that, on average, exclusions are of higher quality (i.e., more transitory) following intervention by the Securities and Exchange Commission (SEC) into non-GAAP reporting. We further find that firms that stopped releasing non-GAAP earnings numbers after the SEC intervention had lower quality exclusions in the pre-intervention period. These results are consistent with the SEC's objectives of improving the quality of non-GAAP earnings figures. However, when we decompose total exclusions into special items and other exclusions, we find evidence that the quality of special items has decreased in the post-intervention period, which suggests that managers adapted to the new disclosure environment by shifting more recurring expenses into special items. This suggests that there may be unintended consequences arising from the heightened scrutiny over non-GAAP reporting.