Non-IFRS Reporting Practices: Evidence from the Selected Companies Listed in Dhaka Stock Exchange (DSE)
Md. Ahasan Uddin & Amirus Salat
Department of Accounting & Information Systems
University of Dhaka, Dhaka, Bangladesh.
- Introduction:
Non-IFRS earnings are alternative measures of the financial performance of the company. They are also referred to as “Pro-forma earnings,” “underlying profit,” “street earnings,” “normalized profits,” “core earnings,” “non-GAAP earnings” or “non-conforming financial information” (CESR, 2005; Christensen, Merkley, Tucker, &Venkataraman, 2010). The standard setters prescribe International Financial Reporting Standards (hereafter IFRS) earnings. Non-IFRS refers to the alternative measure of presenting the underlying performance information which does not comply with IFRS. Company executives include or exclude recurring or non-recurring items to determine non-IFRS figures for disclosing performance information beyond the standards of IFRS (Bhattacharya, Black, Christensen, &Mergenthaler, 2003; Bradshaw and Sloan 2002). In Bangladesh, GAAP earnings are meant to disclose the earnings following the requirement of IFRSs. A Non-IFRS earnings measure is a numerical measure of company performance that is excluded from the directly comparable IFRS measures. In this paper we define Non-IFRS measures as “Throughout the Annual Reports the terms which do not have a standardized prescribed meaning under Bangladesh Financial Reporting Standard (BFRS).”
Generally Accepted Accounting Principles (GAAP) provides for a standardized method of calculating various performance measures, such as net income, income from continuing operations, and cash flow from operations. There are two primary sources of GAAP: the International Financial Reporting Standards (IFRS), as developed by the International Accounting Standards Board (IASB), and the U.S. GAAP, as developed by the Financial Accounting Standards Board (FASB). Financial reporting must have the ability to present useful information so that investors and creditors make an active decision. Financial reporting of Bangladesh has been regulated by the Companies Act 1994, SEC Rules 1987, and Income Tax Ordinance 1984. Along with, International Accounting Standards (IAS) adopted as Bangladesh Securities & Exchange Commissions (hereafter BSEC) has mandated Bangladesh Accounting Standards (BASs) in the preparation of financial statement. Some local laws are being inconsistent with the accounting standard which creates a hurdle for implementing the IAS/ IFRS with full compliance. However, if the companies disclose non-GAAP measures or calculate they are earning other than the GAAP standards, there must have controls to ensure that non-GAAP measures would be meaningful and useful. Managers use non-IFRS earnings opportunistically to change investors’ perceptions (Bhattacharya et al.), and investors were misled by non-GAAP earnings with weaker corporate governance (Jennings and Marques, 2011). However, the voluntary disclosure of non-GAAP earnings reduces information asymmetries between internal management of companies and parties external to the firm. That is why reporting of pro forma earnings is increasing by the companies to make value relevant information as GAAP number falls short of the benchmark but non-GAAP earning number does not.
This study will address the two research questions. Those are: Which earnings metrics (IFRS or Non-IFRS) is emphasized by management in the annual report? Where pro forma earnings are emphasized, is reconciliation to IFRS net profit provided within the annual report? To address the research questions authors here selected 50 companies from five sectors listed. Those are Engineering, Food & Allied, Textile, Ceramics, Pharmaceuticals, and Chemicals. A total sample of 50 firms is collected from five sectors for the period from 2016 to 2017. A disclosure index has been developed to conclude the findings. The findings satisfied the research question where it is found that Bangladeshi companies have a low level of compliance with IFRS earnings but they don‘t emphasize on non-IFRS reporting as well. Although there are many studies of non-IFRS earnings disclosures, we do not find any work on Non-IFRS earnings disclosures in Bangladesh. Therefore, the study contributes to the non-IFRS earnings disclosures literature by developing countries like Bangladesh. Moreover, the study also helps the regulators to frame a reporting requirement of Non-IFRS earnings disclosures in Bangladesh.
The remainder of the paper is divided as follows. Section 2 provides a literature review and finds the research gap, while Section 3 provides a summary of regulators’ policy approaches to the disclosure of non-GAAP earnings. Section 4 covers the research design and Section 5 presents the discussion and analysis. The final section presents the conclusion.
- 2. Literature Review
Many studies tried to find out the value relevance of the use of Non IRFS earnings by the companies in their annual reports. Bradshaw and Sloan (2002), find that non-GAAP earnings provided by managers and analysts are more value relevant and that investors are more responsive to non-GAAP earnings relative to GAAP earnings. Lougee and Marquardt (2004) find that firms with less informative GAAP earnings are more likely to disclose pro forma earnings than other firms and that the pro forma earnings have a greater relative and incremental information content when GAAP earnings in formativeness is low, which suggests that pro forma earnings are useful to investors. Englmaier, Filipi, and Singh (2010) use different price and returns models to compare the value relevance of pro forma earnings, GAAP earnings, and Street earnings. They find that all three earnings measures are value relevant. Also, they find that pro forma earnings are significantly more value relevant than Street earnings and GAAP earnings. Their results suggest that managers voluntarily disclose pro forma earnings to inform investors rather than to mislead them. According to Bhattacharya et al. (2003), non-GAAP earnings are more informative and less volatile than GAAP earnings if the adjustment to GAAP earnings is non- recurring such as restructuring, extraordinary items. Reimsbach (2014) documented that non-GAAP disclosures are increasing investor’s evaluation of a company’s earnings performance. Reimsbach also (2014) concluded that investors’ judgment is used to ensure a company’s attractiveness as an investment when pro forma or non-GAAP earning is emphasized on earnings announcement.
On the other hand, opponents argue that non-GAAP earnings are a tool that managers use to manipulate reported earnings to mislead investors. Doyle et al. (2003) find that items excluded from GAAP earnings can predict future cash flows and returns, which suggests that the excluded expenses may be recurring items. Lougee and Marquardt (2004) find that firms that miss the earnings benchmark based on GAAP earnings are more likely to report pro forma earnings and, in this case, pro forma earnings are weakly and negatively correlated with future returns; which suggest that investors failed to incorporate negative information contained in the pro forma earnings when it was announced. In their Australian study, Cameron, Percy, & Stevenson (2012) conclude that “impression management” is the most common motivation for managers to emphasize non-GAAP earnings. Elliott (2006) found that manager‘s emphasis on pro forma earnings so that it can influence non-professional investor‘s behavior and judgment toward the company‘s performance. However, the influence of judgment can be mitigated by a quantitative reconciliation of pro forma earnings to GAAP earning.
The frequent practice of reporting non-GAAP earnings measures raises suspicions about the trustworthiness of the generally accepted accounting practice that meets the needs of a range of users (Rainsbury, 2015). There is evidence that managers use non-GAAP earnings opportunistically to attract and change investors’ perceptions (Bhattacharyya et al., 2004). Research evidence also suggests that the higher the pro forma earnings relative to GAAP numbers, the lower the future returns (Lougee and Marquardt, 2004). Bhattacharyya et al., (2004) and Frankel, McVay, & Soliman, (2013) highlighted that firms which have less persistent earnings and those experience losses in their business have a better association with Non-GAAP earning disclosures. From the research evidence, it is suggested that companies are more likely to disclose pro forma earnings to avoid earning decline or enhancing core earnings (Bhattacharya et al., 2004).
There are specific characteristics which act as the incentives to manipulate reported earnings. One important characteristic is that the non-GAAP earnings from these firms are more likely to meet or beat earnings benchmarks while the GAAP earnings are more likely to miss earnings benchmarks (Bhattacharya et al. 2004; Isidro and Marques 2009). Bhattacharya et al. (2004) find that firms with non-GAAP earnings disclosures tend to be young firms concentrated in the technology and business services industries. They are less profitable, more liquid and have higher leverage ratios and book to market ratios than other firms in their industries. Therefore, managers from these firms have more incentives to use different strategies to disclose non-GAAP earnings. The managers are more likely to emphasize the non-GAAP earnings metric to portray better performance or disclose it for catering to investors’ expectations. Bowen, Davis, and Matsumoto (2005) use hand-collected data from press releases to examine factors associated with the emphasis level placed on pro forma earnings. They find that the market reaction to pro forma earnings surprises is greater when the level of emphasis placed on pro forma numbers is higher and that investors are affected by managers’ emphasis on pro forma earnings. Overall, these studies suggest that managers opportunistically disclose non-GAAP earnings to meet earnings benchmarks and mislead investors about firms’ performance. So in literature, it is found that firms may use opportunistically Non-IFRS earnings to manipulate the earnings benchmarks. So this is working as a motivation for the author to find out whether companies in Bangladesh are using Non-IFRS earnings and whether they are disclosing correctly.
- Measurement and disclosures of Non-IFRS earnings:
Developed countries have separate guidelines about the Non-GAAP earnings. From 2001, US Securities & Exchange Commissions (SEC) expressed its concerned about the Non-GAAP earnings which may mislead the investors. (Dow Jones & Company, 2001; SEC, 2001). Then, in July 2002, the Sarbanes-Oxley Act became law, prohibiting the use of non-GAAP earnings to mislead investors in any way. During 2013, the SEC formed a task force to scrutinize companies’ non-GAAP earnings metrics that could potentially mislead the stakeholders (Rapoport, 2013). The Sarbanes-Oxley Act aimed at directing the SEC to execute and impose rules to enhance public company financial disclosures. The SEC adopted a latest Regulation G in 2003 which applies to non-GAAP financial measures included in public disclosures. Regulation G requires non-GAAP measure must be accompanied by the most directly comparable GAAP financial measure and not given greater importance than the GAAP measure, including forward-looking non-GAAP financial measures which would be informative when presented. A quantitative reconciliation should be provided to the most comparable GAAP measures where each adjustment is clearly labeled, quantified and an explanation of various adjustments.
Reconciliations before Regulation G are voluntary. Regulation G requires that companies must reconcile Non-GAAP earnings with the most comparable GAAP earnings. Marque (2006) finds that after Regulation G, investors react more positively to pro forma disclosures. Yi (2007) concludes that firms having opportunistic motives are less likely to disclose pro forma earnings even after Regulation G whereas firms having communication motives are more likely to disclose pro forma earnings even after Regulation G. Huai Zhang and Liu Zheng (2005) suggests that Regulation G reduces mispricing for firms providing with better reconciliation quality. However, no guidelines are found in Bangladesh to about the reporting of Non-IFRS earnings. In most of the developed nations, they have the guidelines from authority about the presentation and disclosures of Non-IFRS earnings. However, no such guidelines still observed in Bangladesh.
Non-recurring items such as –gain or losses on the sale of assets, restructuring costs, research & development costs, depreciation/amortization, items from discontinued operations, stock-based compensation are excluded from IFRS earning to report core earnings which are also called non-IFRS earning. Entwistle, Feltham,& Mbagwu (2012) find that non-GAAP earnings adjustments are more useful for firms with stronger corporate governance, auditor quality and a history of higher reporting quality. In the adjustment of non-GAAP earnings, limited gains are included, but first losses are excluded as personal losses are considered non-recurring items and not relevant to day-to-day operations (SEC, 2002).
Regulation G requires that disclosures of pro forma earnings must provide the most directly comparable GAAP number and an understandable reconciliation of the earnings number in quantitative figures. According to SEC (2002), reconciliation provides the security market with supplementary information to build more accurate pricing of securities.
A question remains whether reconciliation to non-GAAP earnings will minimize the tendency to mislead investors occurred by non-GAAP earnings. Huai Zhang and Liu Zheng (2005) tried to find the question where they opined that investors are likely to be better informed if better reconciliation about pro forma adjustment is provided to investors. They also found better reconciliation results incorrectness of stock pricing. However, reconciliations will not affect the pricing of securities if the information related to reconciliation can be obtained from elsewhere such as – from income statement as they cannot contain incremental information related to reconciliation or adjustment.
Since there is no such requirements of disclosures and reconciliation of Non-IFRS earnings in Bangladesh, a huge research gap exist in this area. This motivated the author to try to find out the Non-IFRS earnings disclosures and reconciliation by the Bangladeshi companies.
- 4. Research Design:
This section describes how the research questions are investigated.
4.1 Research Objective: The primary objective of this paper is to find out what the various sectors have disclosed earnings metrics and whether reconciliation is provided if Non-IFRS earnings matrices are disclosed. To achieve the primary objective, the specific objectives are:
1) To find out the earnings metrics (IFRS or Non-IFRS) emphasized by management in the annual report
2) To find out whether is reconciliation to IFRS net profit provided within the annual report if Non-IFRS earnings metrics are reported
4.2 Sample Selection:
The data collected for the study involves the examination of annual reports for the year 2015 and 2016 of the listed companies of Dhaka Stock Exchange (DSE). The research study is based on the sample of 50 companies of total five industries. Fifty companies have been chosen purposively have been taken to analyze which type of companies have more compliance with GAAP.
The audited annual report is the basis for obtaining the accounting information, and it is the only source to find out the compliance of GAAP by the companies. However, non-GAAP measures cannot be found in audited annual report especially in the section of financial statements which are audited by external auditors. However, from the narrative sections and comments section of the annual report, the disclosure of non-GAAP measures can be found. However, earning press releases or quarterly earnings announcements are the best source for finding the information about non-GAAP measures. A total of 100 observations are made to carry out the study. The industry classifications of the sample are followed:
| Industry | No. of firms | Observed firm years |
| Engineering | 14 | 28 |
| Food and Allied | 10 | 20 |
| Textile | 11 | 22 |
| Ceramics | 5 | 10 |
| Pharmaceuticals and Chemicals | 10 | 20 |
| Total | 50 | 100 |
Table1:Industry Classification of the Sample
The study eliminates financial institutions as they are not manufacturing companies. And to be noted, the financial institutions are highly regulated and complied with the standards. So, there is less scope to conduct a study for those but manufacturing industries are mostly family owned and there is high possibility that there may be some deviation from IFRS. That‘s why the study took only manufacturing industries.
4.3 Creating the Disclosure Index (DCI):
A disclosure index has been drawn to analyze IFRS compliance and non-IFRS measures for the sample companies. Disclosure index includes some disclosure items that could potentially be disclosed by the firms. It is also common in case of research related to the disclosure of Non-GAAP earnings. Here, in this research, the index (DCI) was prepared using binary values, i.e., 1 for the disclosure of a particular item and 0 for nondisclosure. All the disclosure items are being equally weighted following the previous studies. The following items are considered for disclosure index.
| Disclosures Issues | Explanation | Measurement & Score |
| 1. IFRS/Non IFRS earnings | A company is disclosing IFRS earnings in its annual reports | One if all the line items presented, in the Statement of Comprehensive Income in accordance with the requirements of IAS 1 otherwise 0. |
| 2. Pro forma earnings disclosures | If management or chairman or any other directors first highlight EBIT, it means pro forma earnings is disclosed or if they mention Net Profit after tax first then IFRS earnings is emphasized. Narrative section of annual report such as –chairman’s or, Managing Director’s or, Director’s report are analyzed to find out the disclosures of pro forma earnings. If management or chairman or any other directors first highlight EBIT and/or NOPAT it means pro forma earnings are disclosed. But if they mention Net Profit after tax first, then IFRS earnings will be emphasized. | One if pro-forma earnings are disclosed otherwise 0. |
| 3. Reconciliation . | Non-IFRS earning adjustment to IFRS earning is said to be reconciled if adjustments are given in Management Discussion & Analysis (MD&A), notes | No reconciliation is disclosed =0 Disclosure of text and/or amount =1 |
- Result and Discussion
This part tells about the results of the research and the results
5.1 IFRS compliance:
Table 2 shows our first discourse issues that we investigated i.e. IFRS and Non IFRS earnings compliance by the various sectors.
| Industry | IFRS earnings Compliance 2016 | IFRS earnings Compliance 2017 |
| Engineer | 43% | 50% |
| Pharmaceuticals | 80% | 80% |
| Textile | 40% | 50% |
| Food | 70% | 80% |
| Ceramics | 50% | 50% |
Table 2: IFRS earnings discourse by various sectors
Figure 1: IFRS earnings compliance by different industries in 2016 & 2017
Pharmaceuticals industries have the highest compliance with IFRS earnings disclosures in both the year (80%) followed by Food industry (70% & 80% respectively). The lowest compliance with IFRS is for textile and engineering industries. In present days, the pharmaceutical industry is a prominent sector which has been successful in grabbing market share. From 2015, the pharmaceutical industry has been the best performer on DSE. To attain SDG‘s goal, pharmaceutical companies also do sustainable reporting. This may be one of the reasons it also has the highest compliance with IFRS to attract more foreign investors. However, the performance of the textile and engineering sector is not satisfactory except the few market-leading companies. Most of the companies of textile, engineering and ceramic sectors are family oriented and have poor governance. However, it is true that the textile industry has fared well with a high market growth rate, and it also has a significant impact as it holds almost more than 90% of market capitalization. Also, the textile industry is the highest exporting sector of Bangladesh; it must have perfect compliance with IFRS to attract foreign investors. Also, food and the ceramic sector is expanding their business in a brief period. Demand grows for these sectors, and market size is also increasing internationally. No significant differences prevail as reporting is almost the same for the corresponding two years.
5.2 Disclosures of pro forma earnings:
One of the research questions is which management emphasizes earning metric in the annual report. Does management first disclose pro forma earnings or GAAP earning? To find the answer to this research question we made the content analysis using the disclosures issue of table 1. If management or chairman or any other directors first highlight EBIT and NOPAT, it means pro forma earnings are disclosed. However, if they mention Net Profit after tax first, then IFRS earnings will be emphasized and find the followings outcome for the two sample years.
| Industry | Disclosing Pro forma earning first, 2016 | Disclosing Pro forma earning first, 2017 |
| Engineer | 25% | 27% |
| Pharmaceuticals | 15% | 15% |
| Textile | 23% | 23% |
| Food | 19% | 17% |
| Ceramics | 18% | 18% |
Table 3: Non GAAP earning measures used by companies within different industries.
The study finds in both the year, engineering industries followed by the textile industries mostly disclose pro forma earnings in the annual reports. The emphasize of pro forma earnings by management can be found in the narrative section of the annual report or the MD&A(Management Discussion and Analysis) section or the comments section of the management, chairman or the other directors. Interestingly the least disclosing of pro forma earnings is the pharmaceutical industry. That means, who have more compliance with IFRS has a tendency to disclose pro forma less earnings.
Figure 2: Disclosures of Pro forma earnings by different industries in 2016 & 2017
From the performance of the sample companies and disclosure index, study finds that the companies who have incurred loss in their operation or having a low EPS or net profit are disclosing pro forma earning first in their annual report. Pro forma earnings are disclosed first for low profit making companies to attract their investors and other stakeholders. They tried to create positive impression in the market by disclosing EBIT or Turnover which is significantly higher than net profit. But, those companies such as in pharmaceutical industries, they have been the very good performer in DSE. Having a satisfactory net profit and EPS, they disclose NPAT before EBIT. This pro forma earnings disclosure seems to be very opportunistic for better impression rather for informative reason.
5.3 Adjustment or reconciliation of Non GAAP measures:
Adjustment or reconciliation must be provided if there is any deviation from GAAP. Among all various measure of Non-IFRS, reconciliation or adjustment is only provided for adjusted EPS. The reconciliation provided with text is higher than reconciliation provided with the amount. Unfortunately, Bangladeshi companies do not provide the amount for adjustment also cannot give a reason for such adjustment. Only a few companies provide adjustment with the amount for adjusted EPS which is insignificant compared to a total number of companies. Moreover, there is no quantitative reconciliation following a comparative GAAP earning to come for a non-GAAP earning which is the severe violation of Regulation G.
| Industry | No adjustment | Adjustment with text | Adjustment with amount |
| Engineer | 0.714 | 0.143 | 0.142 |
| Pharmaceuticals | 0.2 | 0.2 | 0 |
| Textile | 0.636 | 0.273 | 0.091 |
| Food | 0.3 | 0 | 0.1 |
| Ceramics | 0.8 | 0.2 | 0 |
Table 4: Adjustment to GAAP measures.
- Conclusion:
This study has confirmed that IFRS adjusted earnings disclosures and reconciliation by the companies are not good at all. Since Bangladesh has no regulatory framework regarding the disclosures Non-IFRS reporting practices and disclosures so listed companies disclosures and reconciliation of IFRS adjusted earnings is not that much good. For the effective implementation of IFRS and full compliance with accounting standards, there should be proper guidelines issued by BSEC to ensure the proper monitoring as well as good governance in the public sector. The companies lack real motivation toward IFRS‘s as there is not significant research by the Government or other agencies related accounting standards.
This research has a significant contribution to finding out the compliance level of IFRS and use of non-IFRS measures in the context of Bangladesh. However, research in this area is at the very infancy stage.
The study found that the industries that deviated from IFRS use adjusted EPS most as Non-IFRS measure and companies who have higher EBIT, but negative Net Profit discloses pro forma earnings or EBIT first in their annual report. This result indicates that pro forma earnings are disclosed for better impression and not for informative However; company rational analysis would give a better insight rather than sector wise. Moreover this study lack in a cause and effect relationship between the reporting and disclosure of the Non-IFRS earnings and reconciliation. Future research on this area would give a better insight.
References:
Bhattacharya, N., Black, E. L., Christensen, T. E., & Larson, C. R. (2003). Assessing the relative informativeness and permanence of pro forma earnings and GAAP operating earnings. Journal of Accounting and Economics, 36(1-3), 285-319.
Bhattacharya, N., Black, E. L., Christensen, T. E., & Mergenthaler, R. D. (2004). Empirical evidence on recent trends in pro forma reporting. Accounting Horizons, 18(1), 27-43.
Bowen, R. M., Davis, A. K., & Matsumoto, D. A. (2005). Emphasis on pro forma versus GAAP earnings in quarterly press releases: Determinants, SEC intervention, and market reactions. The Accounting Review, 80(4), 1011-1038.
Bradshaw, M. T., & Sloan, R. G. (2002). GAAP versus the street: An empirical assessment of two alternative definitions of earnings. Journal of Accounting Research, 40(1), 41-66.
Cameron, R., Percy, M., & Clarke, P. S. (2012). Do large Australian companies emphasise non-GAAP financial measures over statutory net profit (GAAP) in annual reports?. JASSA, (1), 19.
Christensen, T. E., Merkley, K. J., Tucker, J. W., & Venkataraman, S. (2011). Do managers use earnings guidance to influence street earnings exclusions?. Review of Accounting Studies, 16(3), 501-527.
Committee of European Securities Regulators (CESR). (2005). CESR recommendation on alternative performance measures.
Jones, D. Company.(2001, 19 de junho). SEC probes 4 firms for possible abuses of pro-forma results. Dow Jones Newswires, 19-22.
Doyle, J. T., Lundholm, R. J., & Soliman, M. T. (2003). The predictive value of expenses excluded from pro forma earnings. Review of Accounting Studies, 8(2-3), 145-174.
Elliott, W. B. (2006). Are investors influenced by pro forma emphasis and reconciliations in earnings announcements?. The Accounting Review, 81(1), 113-133.
Englmaier, F., Filipi, A., & Singh, R. (2010). Incentives, reputation and the allocation of authority. Journal of Economic Behavior & Organization, 76(2), 413-427.
Entwistle, G. M., Feltham, G. D., & Mbagwu, C. (2006). Financial reporting regulation and the reporting of pro forma earnings. Accounting Horizons, 20(1), 39-55.
Frankel, R., McVay, S., & Soliman, M. (2011). Non-GAAP earnings and board independence. Review of Accounting Studies, 16(4), 719-744.
Isidro, H., & Marques, A. (2015). The role of institutional and economic factors in the strategic use of non-GAAP disclosures to beat earnings benchmarks. European Accounting Review, 24(1), 95-128.,
Jennings, R., & Marques, A. (2011). The joint effects of corporate governance and regulation on the disclosure of manager‐adjusted non‐GAAP earnings in the US. Journal of Business Finance & Accounting, 38(3‐4), 364-394.
Lougee, B. A., & Marquardt, C. A. (2004). Earnings informativeness and strategic disclosure: An empirical examination of “pro forma” earnings. The Accounting Review, 79(3), 769-795.
Rainsbury, L., Hart, C., & Buranavityawut, N. (2015). GAAP-adjusted earnings disclosures by New Zealand companies. Pacific Accounting Review, 27(3), 329-352.
Reimsbach, D. (2014). Pro forma earnings disclosure: the effects of non-GAAP earnings and earnings-before on investors’ information processing. Journal of Business Economics, 84(4), 479-515.
Rapoport, M. (2013). SEC task force probes use of non-GAAP metrics: hot technology IPOs have brought more focus to accounting issues. Wall Street Journal.
Securities and Exchange Commission. (2001a, 4 de dezembro). Press release 2001-144. Washington, DC: SEC.
Yi, H. (2007). Has Regulation G improved the information quality of non-GAAP earnings disclosures?.
Zhang, H., & Zheng, L. (2011). The valuation impact of reconciling pro forma earnings to GAAP earnings. Journal of Accounting and Economics, 51(1-2), 186-202.