Non Gaap Reporting And Accounting Restatement
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| Author | : Shin-Rong Shiah-Hou |
| Publisher | : |
| Total Pages | : 29 |
| Release | : 2018 |
| Genre | : |
| ISBN | : |
In this study, I examine whether disclosing Non-GAAP earnings is a signal of experiencing accounting restatement. I propose a scenario in which earnings are managed within the constraints of GAAP guidelines, as long as there is sufficient leeway to permit income-increasing accounting choices. Managers usually avoid issuing Non-GAAP earnings because of severe penalties. If this becomes no longer possible within GAAP earning management, managers have incentives to cross the line into Non-GAAP territory. At this point, disclosing Non-GAAP earnings is positively associated with accounting restatement because of the great magnitude of earnings management. I find that firms with restatements experience a significant increase in the relative use of disclosing Non-GAAP earnings with positive other exclusions. Firms with the positive other exclusions excluded from Non-GAAP earnings may exhibit increased likelihood of fraud or core-earnings restatement. Finally, firms disclosing Non-GAAP earnings and having high accounting complexity are more likely to restate than those disclosing Non-GAAP earnings and having low accounting complexity.
| Author | : Zoe-Vonna Palmrose |
| Publisher | : |
| Total Pages | : 0 |
| Release | : 2003 |
| Genre | : |
| ISBN | : |
Our study examines the circumstances of non-GAAP financial reporting by 492 U.S. companies that announced restatements from 1995 to 1999. We analyze the occurrence and resolution of litigation over restatements; and, we explore the role of accounting items in bringing and resolving this litigation. To do so, we focus on the income statement. We provide evidence on the nature and pervasiveness of accounting misstatements and how, if at all, they affect litigation. We assess the nature of restatements by whether normal, recurring earnings from primary perations (core) or other components of earnings (non-core) are misstated and their pervasiveness by estimating the number of primary accounts misstated. In our sample, companies with core restatements have higher frequencies for intentional misstatements (fraud) and subsequent bankruptcy or delisting. They likewise have, on average, more material misstatements, more negative security price reactions to restatement announcements, and more negative security price changes over the six months preceding and following restatement announcements. However, controlling for these and other factors, we find a significant association between accounting items and litigation, whether occurrences or resolutions. Specifically, core restatements - driven primarily by revenue misstatements, a component of core earnings - and more pervasive restatements each play a role, while misstatements of non-core earnings alone do not.
| Author | : Christian Sofilkanitsch |
| Publisher | : |
| Total Pages | : |
| Release | : 2020 |
| Genre | : |
| ISBN | : |
| Author | : Maef Woods |
| Publisher | : |
| Total Pages | : 90 |
| Release | : 2009 |
| Genre | : |
| ISBN | : |
Between January 1, 2002, and September 30, 2005, 1,084 public companies restated previously issued financial statements. This represents 16 percent of the average number of listed companies, as compared to almost 8 percent of listed companies that made restatements between 1997 and 2001 (GAO 2006b, 4). Because they involve correcting financial statements previously filed with the U.S. Securities and Exchange Commission (SEC), restatements may reflect abuse of the flexibility that exists within generally accepted accounting principles (GAAP) and thus have "raised questions about the credibility of accounting practices and the quality of corporate financial disclosure and oversight in the United States" (GAO 2002, 1). Not surprisingly, academic research on restatements has grown in recent years. However, most attention has been focused on effects relative to restatement announcements. In contrast, this study examines the timeframe during which the errors or misapplication of GAAP originally occurred. Specifically, this study explores the relationship between earnings and returns and that between earnings and chief executive officers' (CEOs') cash compensation over the period for which earnings were initially misstated. Using data hand-collected from the original and amended documents filed with the U.S. Securities and Exchange Commission (SEC), after some minor adjustments such as excluding restatements related to purchased in-process research and development, no difference is found in the strength of the association between returns and earnings as originally reported versus as restated. However, decomposing the originally reported earnings into the restated (GAAP-compliant) component and restatement/error (GAAP-non-compliant) component suggests that market participants find both components to be value relevant when profits are originally reported but only the restated (GAAP-compliant) component to be value relevant when losses are originally reported. Similar results are found when analyzing the relation between earnings and CEOs' cash compensation. When firms initially report profits, both the GAAP-compliant and GAAP-non-compliant components are positively associated with CEOs' cash compensation. Although other explanations are possible, this result is consistent with the market "tolerating" misstatements by profitable firms. Another possible explanation points towards the contracting role of accounting earnings and shareholders' implicit sanction for deviation from GAAP. When firms initially report losses, the GAAP-compliant component is negatively associated with CEOs' cash compensation and the GAAP-non-compliant component is not significant. This suggests that the GAAP-non-compliant component does not play a role in contracting when losses are initially reported. Whether the market tolerates some misstatements from profit-making firms, or efficient contracting requires such deviations, are subjects of future research.
| Author | : United States. General Accounting Office |
| Publisher | : |
| Total Pages | : 276 |
| Release | : 2002 |
| Genre | : Financial statements |
| ISBN | : |
| Author | : Martin S. Fridson |
| Publisher | : John Wiley & Sons |
| Total Pages | : 403 |
| Release | : 2011-06-01 |
| Genre | : Business & Economics |
| ISBN | : 1118064208 |
The updated, real-world guide to interpreting and unpacking GAAP and non-GAAP financial statements In Financial Statement Analysis, 5th Edition, leading investment authority Martin Fridson returns with Fernando Alvarez to provide the analytical framework you need to scrutinize financial statements, whether you’re evaluating a company’s stock price or determining valuations for a merger or acquisition. Rather than taking financial statements at face value, you’ll learn practical and straightforward analytical techniques for uncovering the reality behind the numbers. This fully revised and up-to-date 5th Edition offers fresh information that will help you to evaluate financial statements in today’s volatile markets and uncertain economy. The declining connection between GAAP earnings and stock prices has introduced a need to discriminate between instructive and misleading non-GAAP alternatives. This book integrates the alternatives and provides guidance on understanding the extent to which non-GAAP reports, particularly from US companies, may be biased. Understanding financial statements is an essential skill for business professionals and investors. Most books on the subject proceed from the questionable premise that companies' objective is to present a true picture of their financial condition. A safer assumption is that they seek to minimize the cost of raising capital by portraying themselves in the most favorable light possible. Financial Statement Analysis teaches readers the tricks that companies use to mislead, so readers can more clearly interpret statements. Learn how to read and understand financial statements prepared according to GAAP and non-GAAP standards Compare CFROI, EVA, Valens, and other non-GAAP methodologies to determine how accurate companies’ reports are Improve your business decision making, stock valuations, or merger and acquisition strategy Develop the essential skill of quickly and accurately gathering and assessing information from financial statements of all types Professional analysts, investors, and students will gain valuable knowledge from this updated edition of the popular guide. Filled with real-life examples and expert advice, Financial Statement Analysis, 5th Edition, will help you interpret and unpack financial statements.
| Author | : David T. Doran |
| Publisher | : Business Expert Press |
| Total Pages | : 297 |
| Release | : 2012-07-03 |
| Genre | : Business & Economics |
| ISBN | : 1606493884 |
Accounting is the score keeping system in the “game” of business, and you won’t do well in any “game” if you don’t understand how the score is kept. If you’re a practicing manager, MBA student, or a non-accounting business major, this book will do more than help you stay in the game. Inside, United States financial reporting standards are compared and contrasted with international financial reporting standards, and the authors detail how management’s choice of accounting methods and their required estimates in reporting transactions and events impact financial statements, both immediately and in the future. Unlike typical accounting books, journal entries are not used to illustrate topical coverage. This unique book exclusively provides you with a decision-making perspective by using the accounting equation format to directly illustrate financial statement effects of transactions and events. Most of the topics addressed in this book are typically studied by accounting majors in the two course “intermediate” accounting sequence, but the text also includes discussion of consolidations—a topic generally covered in the “advanced” accounting course. Intermediate accounting textbooks alone typically exceed well over 1,500 pages. By exclusively applying a user’s perspective, and limiting topical content to areas relevant for decision making, this book allows non-accountants to acquire the requisite underlying knowledge in a concise, easy to understand text.
| Author | : Ernst & Young LLP |
| Publisher | : John Wiley & Sons |
| Total Pages | : 5679 |
| Release | : 2015-03-10 |
| Genre | : Business & Economics |
| ISBN | : 1118999991 |
IFRSs, the standards set by the International Accounting Standards Board (IASB), are complex and sometimes obscure. Understanding their implications and applying them appropriately requires something special; and that is why International GAAP® 2015 is the essential tool for anyone applying, auditing, interpreting, regulating, studying and teaching international financial reporting. It provides expert interpretation and practical guidance for busy professionals, and includes, in every chapter, detailed analysis of how complex financial reporting problems can be resolved appropriately and effectively. The International Financial Reporting Group of Ernst & Young includes financial reporting specialists from throughout the world. Complex technical accounting issues are explained clearly in a practical working context that enables immediate understanding of the point at issue. International GAAP® 2015 is the only globally focused work on IFRSs. It is not constrained by any individual country’s legislation or financial reporting regulations, and it ensures an international consistency of approach unavailable elsewhere. It shows how difficult practical issues should be approached in the complex, global world of international financial reporting, where IFRSs have become the accepted financial reporting system in more than 100 countries. This integrated approach provides a unique level of authoritative material for anyone involved in preparing, interpreting or auditing company accounts, for regulators, academic researchers and for all students of accountancy. All aspects of the detailed requirements of IFRS are dealt with on a topic-by-topic basis. Each chapter of International GAAP® 2015 deals with a key area of IFRS and has a common structure for ease of use: An introduction to the background issues An explanation of relevant principles A clear exposition of the requirements of IFRS A discussion of the implications in practice and possible alternative solutions available Worked examples Extracts from real company accounts A full listing of the required disclosures "...an important part to play in the process of promoting consistent, comparable and high quality financial reporting under IFRSs ... a book that not only provides an analysis of the requirements of the standards and the principles that they expound, but also presents a unique explanation of how the standards should be interpreted and applied in practice." —The Chairman of Trustees of the IASC Foundation "A standard reference work" —Financial Times "The definitive guide to financial reporting." —The Times
| Author | : MAFROLLA ELISABETTA |
| Publisher | : G Giappichelli Editore |
| Total Pages | : 128 |
| Release | : 2021-03-02 |
| Genre | : Business & Economics |
| ISBN | : 8892195603 |
This book is motivated by the long-lasting, although still recent, discussion on how to ensure that accounting numbers, while supported by auditors’ favourable opinions, are definitely reliable and eliminate any suspicion that accounting reports could be affected by opportunism, which is documented by the discovery of frequent accounting mistakes. The book analyses and discusses restatements from both the theoretical and the practical perspective, considering the complex environment in which they may occur and focusing particularly on accounting restatements that have affected European corporations for over a decade since the mandatory adoption of the International Financial Reporting Standards.
| Author | : Ernst & Young LLP |
| Publisher | : John Wiley & Sons |
| Total Pages | : 4399 |
| Release | : 2015-12-21 |
| Genre | : Business & Economics |
| ISBN | : 1119180481 |
International GAAP® 2016 is a comprehensive reference tool to interpreting and implementing International Financial Reporting Standards (IFRS) and provides detailed analysis of how complex financial reporting problems can be addressed appropriately and effectively. It demonstrates how difficult practical issues should be approached in the new complex global world of international financial reporting, where IFRS has become the accepted financial reporting system in more than 100 countries. The International Financial Reporting Group of Ernst & Young (EY) includes financial reporting professionals from around the world. Complex technical accounting issues are explained clearly in a working context that enables immediate understanding of the point at issue. It is accompanied by numerous worked examples, a comprehensive discussion of the practical issues of the day and the possible alternative options available, and hundreds of illustrations taken from the actual financial statements of companies that report under IFRS. The volumes cover the International Accounting Standards Board's (IASB) conceptual framework, financial statements, accounting policies, non-current assets held for sale and discontinued operations, consolidated financial statements, foreign exchange, inflation, intangible assets, leases, government grants, income taxes, share-based payment, statement of cash flows, hedge accounting, IAS 39, IFRS 9, insurance contracts and others.
