Reliability and Transparency of Non-GAAP Disclosures by Real Estate Investment Trusts (REITs)

Bok Baik · Bruce K. Billings · Richard M. Morton

66 citations0/0 files storedThe Accounting Review

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Auditing, Earnings Management, Governance Accounting Theory and Financial Reporting Financial Reporting and XBRL

Abstract

This paper examines whether industry efforts to decrease managerial discretion, increase uniformity, and improve transparency of a non-GAAP performance measure change voluntary disclosure and market perceptions. We find that the frequency of REITs meeting or beating analysts' expectations of funds from operations (FFO) decreases following explicit industry initiatives to discourage manipulation. Concurrent with this shift, we find that the information content of FFO to investors increased, particularly for firms reporting a reconciliation of FFO with GAAP earnings. We also examine firms in other industries to assess alternative explanations for these results, such as SEC intervention. Collectively, our findings suggest that industry guidance about non-GAAP performance curtailed managers' opportunistic reporting. Furthermore, the market response to FFO is consistent with investors perceiving less manipulation and greater reliability. Our evidence also supports the SEC's subsequent requirement that all non-GAAP disclosures be reconciled to the nearest GAAP measures.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 66 citations exist upstream.

References

2001Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature 1997Earnings management to avoid earnings decreases and losses 1999Earnings Management to Exceed Thresholds 1993Cross-Sectional Determinants of Analyst Ratings of Corporate Disclosures 2002The rewards to meeting or beating earnings expectations 2002Management's Incentives to Avoid Negative Earnings Surprises 2002Earnings Surprises, Growth Expectations, and Stock Returns or Don't Let an Earnings Torpedo Sink Your Portfolio 2002GAAP versus The Street: An Empirical Assessment of Two Alternative Definitions of Earnings

Cited by

2014Audit Quality Effects of an Individual Audit Engagement Partner Signature Mandate 2017Non-GAAP Earnings: A Consistency and Comparability Crisis?2012What is the Relationship Between REIT Governance and Earnings Management?2016Silence is golden? Evidence from disclosing related-party transactions in China 2011Funds from Operations versus Net Income: Examiningthe Dividend Relevance of REIT Performance Measures

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.