Non-GAAP Earnings : International Overview and Suggestions for Research

The purpose of this paper is to synthesize insights from existing research on the disclosure of non-GAAP earnings, from an international point of view, and suggest several avenues for future research in this area. The paper also examines how different regulators and accounting standard setters have approached the topic of non-GAAP earnings disclosure. The paper shows how non-GAAP earning have been found to be more informative than GAAP earnings in several scenarios (countries where non-GAAP disclosures are compulsory, countries where these disclosures are voluntary but regulated and countries where they are not regulated). However, in certain circumstances, these disclosures may also mislead investors. Corporate governance mechanisms can curb managers' opportunistic use of these measures