Non-GAAP earnings and stock price crash risk

• Main Authors: HSU, Charles, WANG, Rencheng, WHIPPLE, Benjamin C.
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2021
• Subjects: Non-GAAP earnings; Stock price crash risk; Disclosure; Regulation; Accounting; Portfolio and Security Analysis
• Online Access: https://ink.library.smu.edu.sg/soa_research/1843; https://ink.library.smu.edu.sg/context/soa_research/article/2870/viewcontent/SSRN_id3454799.pdf
• Institution: Singapore Management University

We investigate whether non-GAAP earnings disclosures increase stock price crash risk. Consistent with non-GAAP disclosures allowing managers to inflate investors’ perceptions about firm performance, our results indicate that income increasing non-GAAP reporting increases crash risk. We also find tha...