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http://hdl.handle.net/10071/13357
acessibilidade
Title: Impression management and non-GAAP disclosure in earnings announcements
Authors: Guillamon-Saorin, E.
Isidro, H.
Marques, A.
Keywords: Alternative performance measures
Disclosure tone
Emphasis
Pro forma earnings
Shareholder protection
Sophisticated investors
Street earnings
Issue Date: 2017
Publisher: Wiley
Abstract: We study the market's reaction to the disclosure of non-GAAP earnings measures that are combined with high impression management. We construct an impression management score that captures several communication techniques that managers often use to positively bias investors’ perceptions of firm's performance. We hand-collect and code both quantitative and qualitative information from earnings announcement press releases of large European firms. Our results indicate that non-GAAP measures are informative to capital markets. However, non-GAAP adjustments are more persistent when accompanied by higher levels of impression management. This evidence is consistent with managers attempting to distort users’ perceptions when non-GAAP adjustments are of lower quality. Market reaction tests suggest that investors are able to see through managers’ intentions and discount non-GAAP information that is accompanied by high impression management. Moreover, investors in more sophisticated markets penalize non-GAAP measures communicated with high impression management. Our results are robust to a battery of sensitivity tests, including using a machine-coded tone measure
Peer reviewed: yes
URI: http://hdl.handle.net/10071/13357
DOI: 10.1111/jbfa.12238
ISSN: 0306-686X
Ciência-IUL: https://ciencia.iscte-iul.pt/id/ci-pub-33345
Accession number: WOS:000399943500004
Appears in Collections:BRU-RI - Artigos em revistas científicas internacionais com arbitragem científica

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