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Post-Regulation G: Non-GAAP Reporting
Linda W. Campbell, University Of Texas At San Antonio
Marshall K. Pitman, University Of Texas At San Antonio
ABSTRACT. The Securities Exchange Commission issued Regulation G (Reg G) in 2003 providing the rules for non-GAAP reporting. We review actual corporate press releases from fourth quarter/FYE 2002 and 2005 of a sample of the S&P 500 companies to determine whether there has been a change in non-GAAP reporting as a result of Reg G. Our results indicate that the proportion of companies releasing non-GAAP earnings information has decreased only moderately. The most common pre-Reg G categories of adjustments have changed and the terminology remains as inconsistent as noted in pre-Reg G research. Finally, the business services sector which had previously been identified as a prominent non-GAAP reporting sector is still an avid discloser of non-GAAP reporting. These results suggest a weak impact of the recent regulation of non-GAAP reporting on these three specific areas of concern and provide important empirical evidence for policy makers and users of financial information.
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