Happy 20-year anniversary non-GAAP earnings: a systematic review of the literature

Abstract

PurposeIt has been two decades since the first academic paper shone a spotlight on non-GAAP earnings. The past 20 years of research investigates concerns over the misuse of these disclosures and resulted in some significant changes to accounting and reporting standards across the globe. This paper aims to document the history of non-GAAP reporting and outline the emerging themes of the now matured practice of non-GAAP reporting.Design/methodology/approachThis systematic literature review searches two popular databases to identify the academic publications relating to non-GAAP reporting between 2002 and 2022. The paper uses bibliographic mapping to present the key statistics of the non-GAAP reporting field of research.FindingsThe non-GAAP reporting environment started out as the “wild West’ but, through regulation and public awareness, emerged as an important supplement to the traditional outputs of financial reporting. Current consensus is recent non-GAAP earnings are informative to users but there is lack of research into qualitative non-GAAP disclosures and the vast body of archival research needs triangulating with more experimental studies.Originality/valueThis paper contributes to the literature by documenting the past 20 years of non-GAAP reporting and identifying the important existing and emerging research areas concerning non-GAAP earnings disclosures.

The Informativeness of Non-GAAP Earnings: Empirical Evidence on China

“…Therefore, the present research focuses on studying the informativeness of non-GAAP earnings of companies listed in the STAR market of China, as this is a newly established market, and no previous relevant studies exist. Brosnan et al (2023) reviewed the past 20 years literature on non-GAAP reporting and identified the important existing and emerging research areas concerning non-GAAP earnings disclosures. Table 1 below presents a review of the main relevant studies.…”