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
| Identifer | oai:union.ndltd.org:fau.edu/oai:fau.digital.flvc.org:fau_13655 |
| Contributors | Cheng, Yun (author), Kohlbeck, Mark (Thesis advisor), Florida Atlantic University (Degree grantor), College of Business, School of Accounting |
| Publisher | Florida Atlantic University |
| Source Sets | Florida Atlantic University |
| Language | English |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation, Text |
| Format | 107 p., application/pdf |
| Rights | 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., http://rightsstatements.org/vocab/InC/1.0/ |
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