Non-GAAP Earnings Disclosures by New Zealand Companies
Rainsbury, Liz; Hart, Carol; Malthus, Sue
Citation:Rainsbury, E., Hart, C., and Malthus, S. (2013). Non-GAAP Earnings Disclosures by New Zealand Companies. Paper presented at Accounting and Finance Conference, Queenstown, New Zealand
Permanent link to Research Bank record:http://hdl.handle.net/10652/2789
This study examines the motivation for the increased reporting of non-GAAP earnings (NGE) by New Zealand companies following the adoption of International Financial Reporting Standards (IFRS). The study contributes to the literature on the impacts of IFRS adoption at national levels and the relationship between statutory earnings and NGE information disclosed by listed companies. The annual reports of fifty-eight listed companies are examined for the period from 2004 to 2012. The number of companies reporting NGE figures has increased substantially over this period of time with NGE figures higher and significantly different to the audited net profit after tax (NPAT) figures in the post-IFRS period. There appears to be some merit in reporting NGE figures as they are better predictors of future earnings and contribute value to analysts’ forecasts. NGE earnings are sometimes higher than NPAT earnings which could suggest that earnings are being used to create a more favourable impression of performance. However, results indicate that NGE compared to NPAT appear to have a higher quality of earnings, conveying additional information to the market.