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IFRS non-GAAP earnings disclosures and fair value measurement

Author

Listed:
  • Steven Cahan
  • Lance Malone
  • Ann Tarca
  • Marvin Wee
  • Steven Cahan

Abstract

type="main" xml:id="acfi12204-abs-0001"> We investigate IFRS non-GAAP earnings adjustments for fair value remeasurements made by companies and analysts and the usefulness of these disclosures for analysts. Examining Australian listed (ASX 200) companies during 2008–2010 (576 firm-years), we find that companies disclosing non-GAAP earnings are more likely to have a higher incidence and magnitude of profit or loss items reflecting asset remeasurements and impairment in their financial statements. We find non-GAAP disclosing companies are more likely to have analyst adjustments to earnings for these items and lower forecast error and dispersion in the following year, suggesting usefulness rather than opportunism in the adjustments.

Suggested Citation

  • Steven Cahan & Lance Malone & Ann Tarca & Marvin Wee & Steven Cahan, 2016. "IFRS non-GAAP earnings disclosures and fair value measurement," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 56(1), pages 59-97, March.
    • Handle: RePEc:bla:acctfi:v:56:y:2016:i:1:p:59-97
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    File URL: http://hdl.handle.net/10.1111/acfi.2016.56.issue-1
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    Citations

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    Cited by:

    1. Claudia Arena & Simona Catuogno & Nicola Moscariello, 2021. "The unusual debate on non-GAAP reporting in the current standard practice. The lens of corporate governance," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 25(3), pages 655-684, September.
    2. Daifei Yao & Majella Percy & Jenny Stewart & Fang Hu, 2018. "Determinants of discretionary fair value measurements: the case of Level 3 assets in the banking sector," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 58(2), pages 561-597, June.
    3. Li Yu (Colly) He & Sue Wright & Elaine Evans, 2018. "Is fair value information relevant to investment decision-making: Evidence from the Australian agricultural sector?," Australian Journal of Management, Australian School of Business, vol. 43(4), pages 555-574, November.
    4. Mariela Carvajal & David H. Lont & Tom Scott, 2022. "Non‐GAAP Earnings Disclosure Trends in New Zealand," Australian Accounting Review, CPA Australia, vol. 32(1), pages 19-35, March.
    5. Thielemann, Felix & Dinh, Tami, 2019. "Non-GAAP earnings disclosures around regulation G – The case of “implicit non-GAAP reporting”," Advances in accounting, Elsevier, vol. 46(C), pages 1-1.
    6. Mark Brosnan & Keith Duncan & Tim Hasso & Janice Hollindale, 2023. "Non‐GAAP earnings and executive compensation: An experiment," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(4), pages 4375-4398, December.
    7. Felix Thielemann & Tami Dinh & Helen Kang, 2019. "Non-GAAP Reporting and Debt Market Outcomes: Evidence from Regulation G," Schmalenbach Business Review, Springer;Schmalenbach-Gesellschaft, vol. 71(2), pages 169-203, May.

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