TITLE:
The Informativeness of Non-GAAP Earnings: Empirical Evidence on China
AUTHORS:
Jinyu Wang, Georgios Georgakopoulos, Kanellos Toudas, Paraskevi Boufounou
KEYWORDS:
Corporate Governance, Informativeness, Non-GAAP Performance Measures, Earnings Persistence, Value Relevance
JOURNAL NAME:
Theoretical Economics Letters,
Vol.13 No.4,
August
31,
2023
ABSTRACT: In 2019, China piloted the Science and Technology Innovation Board (STIB)
to test the practicability of a registration-based system with information disclosure requirements different from those of the
approval-based system widely used.
Using empirical data, the relationship between the informativeness (measured by
earnings persistence and value relevance) of non-GAAP performance measures
(core earnings and non-recurring gains and losses), of companies listed in the
STIB was explored. The main findings are both measures capture earnings
persistence, and core earnings are value-relevant; the sign of the performance
measure influences informativeness; the informativeness of non-recurring
profits and losses improves after setting the board.