Non-GAAP reporting in Australia.

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This thesis provides evidence on non-GAAP reporting by ASX 500 listed companies and the influence of regulatory changes. I provide a detailed review of the extant literature of non-GAAP reporting by firms globally, emphasising the prevalence, causes and consequences. Firms tend to voluntarily disclose these additional performance metrics in order to convey information that cannot be translated by current accounting standards. Firstly, I find that regulatory changes have influenced non-GAAP reporting in Australia. As a consequence of the increase in this behaviour, government bodies and professional associations have issued guidelines on how to disclose non-GAAP metrics alongside GAAP metrics in the earnings press release. Secondly, I investigate the quality of non-GAAP earnings and find that they are overall of higher quality than GAAP earnings, which is broadly consistent with the informative disclosure explanation for non-GAAP reporting. In addition, I find that the introduction of A-IFRS in 2005 has affected some of the assessed earnings metrics quality. Marginal differences also suggest that A-IFRS is associated with an increase in the degree of transitory items in bottom-line earnings, reducing some earnings quality properties. The overall results of this thesis suggest that regulators, standard setters and other financial statement users can benefit from additional research addresses the voluntary disclosure of “adjusted” earnings metrics.
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