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Managerial reputation and Non-GAAP earnings disclosures
- Date Issued:
- 2014
- Summary:
- I examine how managerial reputation affects the quality of non-GAAP earnings disclosures and how the market reacts to non-GAAP earnings disclosures associated with managerial reputation. Although there was an initial dip in the frequency of non-GAAP earnings disclosures after SOX and Regulation G, the frequency of non-GAAP earnings disclosures has increased in recent years (Brown, Christensen, Elliott and Mergenthaler 2012). Motivated by the efficient contracting theory and managerial reputation incentives, I investigate whether reputable managers are associated with higher quality non-GAAP earnings disclosures. I also investigate whether the market is more responsive to non-GAAP earnings disclosed by reputable managers. Using empirical models modified from prior research, I find that reputable managers are less likely to disclose non-GAAP earnings, which is consistent with the efficient contracting explanation. I also find that reputable managers exclude more recurring items that are related to future operating earnings when they disclose non-GAAP earnings, which is consistent with the rent extraction explanation in prior research. Finally, I find that managerial reputation has an incremental effect on the market reaction and that the market is more responsive to non-GAAP earnings disclosed by reputable managers if the unexpected earnings are positive. The study contributes to both non-GAAP earnings disclosures literature and managerial reputation incentives literature. It also has implications for investors, managers, and regulators.
Title: | Managerial reputation and Non-GAAP earnings disclosures. |
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Name(s): |
Cheng, Yun, author Kohlbeck, Mark, Thesis advisor Florida Atlantic University, Degree grantor College of Business School of Accounting |
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Type of Resource: | text | |
Genre: | Electronic Thesis Or Dissertation | |
Date Created: | 2014 | |
Date Issued: | 2014 | |
Publisher: | Florida Atlantic University | |
Place of Publication: | Boca Raton, Fla. | |
Physical Form: | application/pdf | |
Extent: | 107 p. | |
Language(s): | English | |
Summary: | I examine how managerial reputation affects the quality of non-GAAP earnings disclosures and how the market reacts to non-GAAP earnings disclosures associated with managerial reputation. Although there was an initial dip in the frequency of non-GAAP earnings disclosures after SOX and Regulation G, the frequency of non-GAAP earnings disclosures has increased in recent years (Brown, Christensen, Elliott and Mergenthaler 2012). Motivated by the efficient contracting theory and managerial reputation incentives, I investigate whether reputable managers are associated with higher quality non-GAAP earnings disclosures. I also investigate whether the market is more responsive to non-GAAP earnings disclosed by reputable managers. Using empirical models modified from prior research, I find that reputable managers are less likely to disclose non-GAAP earnings, which is consistent with the efficient contracting explanation. I also find that reputable managers exclude more recurring items that are related to future operating earnings when they disclose non-GAAP earnings, which is consistent with the rent extraction explanation in prior research. Finally, I find that managerial reputation has an incremental effect on the market reaction and that the market is more responsive to non-GAAP earnings disclosed by reputable managers if the unexpected earnings are positive. The study contributes to both non-GAAP earnings disclosures literature and managerial reputation incentives literature. It also has implications for investors, managers, and regulators. | |
Identifier: | FA00004185 (IID) | |
Degree granted: | Dissertation (Ph.D.)--Florida Atlantic University, 2014. | |
Collection: | FAU Electronic Theses and Dissertations Collection | |
Note(s): | Includes bibliography. | |
Subject(s): |
Capital productivity -- Measurement Disclosure in accounting Industrial management Investment analysis Risk management |
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Held by: | Florida Atlantic University Libraries | |
Sublocation: | Digital Library | |
Links: | http://purl.flvc.org/fau/fd/FA00004185 | |
Persistent Link to This Record: | http://purl.flvc.org/fau/fd/FA00004185 | |
Use and Reproduction: | Copyright © is held by the author, with permission granted to Florida Atlantic University to digitize, archive and distribute this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder. | |
Use and Reproduction: | http://rightsstatements.org/vocab/InC/1.0/ | |
Host Institution: | FAU | |
Is Part of Series: | Florida Atlantic University Digital Library Collections. |