IDEAS home Printed from https://ideas.repec.org/p/asx/nugsbw/2026-06.html

Do Investors Respond Differently to Non-GAAP Earnings After Material GAAP Restatements?

Author

Listed:
  • Christian Sofilkanitsch

    (Nazarbayev University, Graduate School of Business)

Abstract

I investigate whether investors change their responsiveness to non-GAAP earnings following the revelation of past GAAP reporting failures. Using an event-study design, I find that the earnings response coefficient (ERC) for non-GAAP earnings declines by 40.4 percent after the announcement of material GAAP restatements, suggesting that investors view non-GAAP earnings as less informative once the reliability of the underlying GAAP framework is called into question. The decline in non-GAAP ERCs is not explained by changes in delayed investor reactions or non-GAAP-related SEC comment letters. Taken together, the results are consistent with a credibility spillover across mandatory and voluntary reporting frameworks, whereby investors use GAAP signals to infer the credibility of non-GAAP earnings. My findings underscore the interconnectedness of GAAP and non-GAAP reporting and contribute to ongoing debates about the credibility of non-GAAP measures.

Suggested Citation

  • Christian Sofilkanitsch, 2026. "Do Investors Respond Differently to Non-GAAP Earnings After Material GAAP Restatements?," Working Papers 2026/06, Nazarbayev University, Graduate School of Business.
    • Handle: RePEc:asx:nugsbw:2026-06
    as

    Download full text from publisher

    File URL: https://drive.google.com/file/d/13FwRo_CHVnLN3TkUcQTm-YLRvYtfl23w/view
    File Function: First version, 2026
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:asx:nugsbw:2026-06. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Aigerim Yergabulova (email available below). General contact details of provider: https://edirc.repec.org/data/gsbnukz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.