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Managerial reputation and Non-GAAP earnings disclosures

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. / Includes bibliography. / Dissertation (Ph.D.)--Florida Atlantic University, 2014. / FAU Electronic Theses and Dissertations Collection

Identiferoai:union.ndltd.org:fau.edu/oai:fau.digital.flvc.org:fau_13655
ContributorsCheng, Yun (author), Kohlbeck, Mark (Thesis advisor), Florida Atlantic University (Degree grantor), College of Business, School of Accounting
PublisherFlorida Atlantic University
Source SetsFlorida Atlantic University
LanguageEnglish
Detected LanguageEnglish
TypeElectronic Thesis or Dissertation, Text
Format107 p., application/pdf
RightsCopyright © 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., http://rightsstatements.org/vocab/InC/1.0/

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