What's in a Name? Investors' Reactions to Non‐GAAP Labels
研究公司如何标注非GAAP盈利影响投资者信息搜索和决策，发现高审查投资者不受标签误导，低审查投资者易被不当标签欺骗。
ABSTRACT Using a mixed‐methods approach, I investigate how the terms that firms use to label non‐GAAP earnings interact with investors' scrutiny of non‐GAAP reporting to affect investors' information search behavior and investment decisions. This study informs regulators, who have expressed concern over the mislabeling of non‐GAAP measures, and managers, who are often criticized for their misuse of discretion in non‐GAAP reporting. I first provide descriptive evidence on the non‐GAAP labels used in practice, followed by a survey to understand what investors believe these labels convey about earnings quality. Finally, drawing on theory from psychology, I predict and then find in an experiment that investors who are more likely to scrutinize non‐GAAP reporting are not affected by non‐GAAP labels when deciding to seek out the non‐GAAP reconciliation, and react positively to appropriately used labels. However, investors who are less likely to scrutinize non‐GAAP reporting rely on the cue provided by the label when deciding whether to seek out the non‐GAAP reconciliation, and are more likely to be misled by inappropriately used labels. For regulators, these findings validate concerns related to the mislabeling of non‐GAAP measures and suggest increased non‐GAAP scrutiny helps counteract mislabeling. For managers, these findings suggest investors react favorably to the appropriate use of discretion in non‐GAAP reporting.