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Macroeconomic uncertainty and non-GAAP disclosure

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  • Liu, Junjun

Abstract

This study examines the relation between macroeconomic uncertainty and firms’ non-GAAP disclosure. Using the dispersion of GDP forecasts and the Chicago Board Options Exchange (CBOE) VIX Index to proxy for macroeconomic uncertainty, this study finds that non-GAAP reporting likelihood decreases during periods of high macroeconomic uncertainty. However, for firms that choose to disclose non-GAAP earnings, their non-GAAP exclusions become more transitory, indicating an increase in non-GAAP reporting quality. Further evidence suggests that the increase in non-GAAP reporting quality is driven by the decrease in the persistence of excluded special items. Overall, the findings of this study advance the knowledge of how non-GAAP disclosure changes as macroeconomic uncertainty varies.

Suggested Citation

  • Liu, Junjun, 2024. "Macroeconomic uncertainty and non-GAAP disclosure," Finance Research Letters, Elsevier, vol. 60(C).
    • Handle: RePEc:eee:finlet:v:60:y:2024:i:c:s1544612323012886
    DOI: 10.1016/j.frl.2023.104916
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    References listed on IDEAS

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    More about this item

    Keywords

    Macroeconomic uncertainty; Non-GAAP disclosure; GDP forecast dispersion; VIX Index;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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