Reporting Non Gaap Financial Measures
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Reporting Non Gaap Financial Measures
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Author : Nicola Moscariello
language : en
Publisher: Cambridge Scholars Publishing
Release Date : 2019-11-25
Reporting Non Gaap Financial Measures written by Nicola Moscariello and has been published by Cambridge Scholars Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-11-25 with Business & Economics categories.
The use of alternative performance indicators (APMs) (also known as ‘Non-GAAP’ earnings) is a widespread phenomenon, and the increased reliance on APMs has recently triggered a strong debate among regulators, managers and investors on the nature of these ‘tailored’ earnings and on the economic reasons behind them. On one hand, APMs might reflect managers’ attempt to offer useful information to predict companies’ future sustainable cash-flows and earnings (information hypothesis), while, on the other, the non-standardized nature of these metrics impacts on the comparability of the financial results, and reduces the reliability and the faithful representation of financial information (opportunistic hypothesis). By collecting several theoretical and empirical contributions on APMs, this book provides a number of interesting and useful insights on the economics of APMs and their impact on financial markets.
Reporting Non Gaap Financial Measures
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Author : Nicola Moscariello
language : en
Publisher:
Release Date : 2021-08
Reporting Non Gaap Financial Measures written by Nicola Moscariello and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2021-08 with categories.
The use of alternative performance indicators (APMs) (also known as 'Non-GAAP' earnings) is a widespread phenomenon, and the increased reliance on APMs has recently triggered a strong debate among regulators, managers and investors on the nature of these 'tailored' earnings and on the economic reasons behind them. On one hand, APMs might reflect managers' attempt to offer useful information to predict companies' future sustainable cash-flows and earnings (information hypothesis), while, on the other, the non-standardized nature of these metrics impacts on the comparability of the financial results, and reduces the reliability and the faithful representation of financial information (opportunistic hypothesis). By collecting several theoretical and empirical contributions on APMs, this book provides a number of interesting and useful insights on the economics of APMs and their impact on financial markets.
The Pitfalls Of Non Gaap Metrics
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Author : H. David Sherman
language : en
Publisher:
Release Date : 2017
The Pitfalls Of Non Gaap Metrics written by H. David Sherman and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017 with Accounting categories.
For decades, companies have used custom metrics that don't conform to generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS) as supplements to their official financial statements. Some common non-GAAP measures include adjusted earnings before interest, taxes, depreciation, and amortization (known as adjusted EBITDA), free cash flow, funds from operations, adjusted revenues, adjusted earnings, adjusted earnings per share, and net debt. However, as the authors point out, it's not unusual for these alternative measures to lead to problems. Since companies devise their own methods of calculation, it's difficult to compare the metrics from company to company - or, in many cases, from year to year within the same company. According to the authors, alternative measures, once used fairly sparingly and shared mostly with a small group of professional investors, have become more ubiquitous and further and further disconnected from reality. In 2013, McKinsey and Company found that all of the 25 largest U.S.-based nonfinancial companies reported some form of non-GAAP earnings. Press releases and earnings-call summaries often present non-GAAP measures that are increasingly detached from their GAAP-based equivalents. In addition to creating potential problems for investors, the authors argue, alternative metrics can harm companies themselves by obscuring their financial health, overstating their growth prospects beyond what standard GAAP measures would support, and rewarding executives beyond what is justified. Board members, top executives, compliance officers, and corporate strategists need to make sure that whatever alternative measures companies use improve transparency and reduce bias in financial reports. Although no standard is perfect, the authors note that GAAP and IFRS standards provide a foundation for consistent measurement of corporate performance over time and across businesses.
Transparency And Consistency Of Non Gaap Reporting Across Europe
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Author : Christoph Beis
language : en
Publisher: GRIN Verlag
Release Date : 2022-09-01
Transparency And Consistency Of Non Gaap Reporting Across Europe written by Christoph Beis and has been published by GRIN Verlag this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022-09-01 with Business & Economics categories.
Bachelor Thesis from the year 2017 in the subject Economics - Finance, grade: 1,0, University of Mannheim, language: English, abstract: Non-Generally Accepted Accounting Principles (non-GAAP) measures are figures that are not legally defined as opposed to GAAP measures which are specified by the laws of every country in order to ensure a true and fair view. The European non-GAAP disclosures will be examined with respect to transparency and consistency across companies, countries and time horizons. The thesis will point out the ambiguous character of non-GAAP reporting, being both informative and opportunistic. The carried out sample studies of European firms previous findings that non-GAAP reporting is a common procedure in Europe and that usage varies across European countries and industries. Moreover, it extends existing literature by showing that measures even vary within the same industry and over time and that individual factors, such as the variable pay determination of executives, might be explanatory factors for the usage of non-GAAP figures.
Implications Of Non Gaap Financial Measures On Management Attention In Large Swiss Companies
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Author : Adrian Burkhalter
language : en
Publisher:
Release Date : 2019
Implications Of Non Gaap Financial Measures On Management Attention In Large Swiss Companies written by Adrian Burkhalter and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
The reporting of non-GAAP financial figures is no new phenomenon. Though, in recent years, the practice of disclosing adjusted financial metrics has become increasingly popular. This paper aims to analyze the impact that alternative performance measures have on management attention in Swiss companies. The research is based on data from Thomson Reuters I/B/E/S as well as the newly available data from remuneration-reports following the implementation of Swiss legislation. It is found that adjusted performance figures manage to meet-or-beat analyst consensus significantly more frequently, indicating that management might opportunistically set adjustment amounts to beat market expectations. Furthermore, the thesis provides evidence that executive compensation is significantly dependent on the development of adjusted net income while official net income following GAAP shows no effect. This paper supports various findings of previous research and provides insight into the use of non-GAAP figures in Swiss publicly listed companies.
Non Gaap Reporting
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Author : Konstantin Grün
language : en
Publisher:
Release Date : 2019
Non Gaap Reporting written by Konstantin Grün and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
This study attempts to enhance understanding regarding the impact of Non-GAAP reporting on the trading behaviour of sophisticated and non-sophisticated investors. For this purpose, the study analyses whether prior research findings concerning disclosure of Non-GAAP EPS and its effect on sophisticated and non-sophisticated investors are still relevant today. In addition, the role of alternative Non-GAAP measures is explored in this context. The alternative Non-GAAP measures that are addressed in this study are passenger load factor, revenue per passenger mile and cost per available seat mile in the airline industry, and value of backlog as well as value of new orders in the homebuilding industry. To test whether findings of prior research are still pertinent, a cross-sectional sample consisting of 4915 quarterly observations concerning Non-GAAP EPS disclosures from 2013-2014 is collected by hand. Two smaller additional cross-sectional samples are collected to investigate the impact of alternative Non-GAAP measures in the homebuilding and airline industries from 2013-2016. Most findings of this study suggest that non-sophisticated investors are more likely to rely on Non-GAAP information than sophisticated investors. However, it is argued that one should be cautious about making overreaching statements concerning Non-GAAP disclosure in general, as has been done by prior research, since not all Non-GAAP figures, such as the passenger load factor in the airline industry, affect the distinguished investor groups differently in their trading behaviour. Furthermore, depending on the context of the Non-GAAP to the related GAAP figures, sophisticated investors may in fact be more likely to rely on Non-GAAP information.
Financial Statement Analysis
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Author : Martin S. Fridson
language : en
Publisher: John Wiley & Sons
Release Date : 2022-04-12
Financial Statement Analysis written by Martin S. Fridson and has been published by John Wiley & Sons this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022-04-12 with Business & Economics categories.
The updated, real-world guide to interpreting and unpacking GAAP and non-GAAP financial statements In Financial Statement Analysis, 5th Edition, leading investment authority Martin Fridson returns with Fernando Alvarez to provide the analytical framework you need to scrutinize financial statements, whether you're evaluating a company's stock price or determining valuations for a merger or acquisition. Rather than taking financial statements at face value, you'll learn practical and straightforward analytical techniques for uncovering the reality behind the numbers. This fully revised and up-to-date 5th Edition offers fresh information that will help you to evaluate financial statements in today's volatile markets and uncertain economy. The declining connection between GAAP earnings and stock prices has introduced a need to discriminate between instructive and misleading non-GAAP alternatives. This book integrates the alternatives and provides guidance on understanding the extent to which non-GAAP reports, particularly from US companies, may be biased. Understanding financial statements is an essential skill for business professionals and investors. Most books on the subject proceed from the questionable premise that companies' objective is to present a true picture of their financial condition. A safer assumption is that they seek to minimize the cost of raising capital by portraying themselves in the most favorable light possible. Financial Statement Analysis teaches readers the tricks that companies use to mislead, so readers can more clearly interpret statements. Learn how to read and understand financial statements prepared according to GAAP and non-GAAP standards Compare CFROI, EVA, Valens, and other non-GAAP methodologies to determine how accurate companies' reports are Improve your business decision making, stock valuations, or merger and acquisition strategy Develop the essential skill of quickly and accurately gathering and assessing information from financial statements of all types Professional analysts, investors, and students will gain valuable knowledge from this updated edition of the popular guide. Filled with real-life examples and expert advice, Financial Statement Analysis, 5th Edition, will help you interpret and unpack financial statements.
The Value Relevance Of A Non Gaap Performance Metric To The Capital Markets
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Author : Susan Albring
language : en
Publisher:
Release Date : 2011
The Value Relevance Of A Non Gaap Performance Metric To The Capital Markets written by Susan Albring and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.
Our paper explores whether reducing management discretion in the reporting of performance is value relevant to capital markets. The study is driven by concerns raised by standard setters and others about the usefulness of performance reporting under Generally Accepted Accounting Principles (GAAP). Of primary interest is whether explicitly defining what information should be included in earnings results in an earnings measure that is more relevant than operating earnings computed according to current GAAP. The value relevance of this non-GAAP earnings measure is examined by estimating market valuation and returns models for 518 U.S. firms included in the Standard amp; Poor's 500 index over the time period 2002-2004. Results show that the explicitly defined non-GAAP measure used is significantly associated with equity market values and returns and is significantly more value relevant than the GAAP measure. Our paper contributes to accounting literature assessing the relevance of earnings in setting equity market value. More specifically, we provide evidence consistent with prior results that non-GAAP performance measures are more useful in valuation than GAAP earnings. However, in contrast to prior studies, the more explicit performance measure we examine removes some of the classificatory discretion pervasive in other non-GAAP earnings metrics. Our study also informs standard setters who are considering whether adjustments to current financial reports can increase their relevance to capital markets.
General Presentation And Disclosures
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Author : IFRS
language : en
Publisher:
Release Date : 2019
General Presentation And Disclosures written by IFRS and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019 with categories.
Research Handbook On Financial Accounting
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Author : Luz Parrondo
language : en
Publisher: Edward Elgar Publishing
Release Date : 2024-01-18
Research Handbook On Financial Accounting written by Luz Parrondo and has been published by Edward Elgar Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2024-01-18 with Business & Economics categories.
Through careful classification of the opportunities and challenges facing current financial regulatory bodies, the Research Handbook on Financial Accounting inspects the financial implications of our ever-changing modern economic and environmental climate.