Post-regulation G findings

Researchers generally recognize that the stated goal of Regulation G (Reg. G), the Securities and Exchange Commission’s (SEC) conditions for use of non-Generally Accepted Accounting Principles (GAAP) financial measures, is to improve the quality and transparency of non-GAAP financial measures rather than to specifically affect various reporting trends of such measures. Various researchers continue to report substantial deceases in the number of non-GAAP disclosures and/or discloser firms since its implementation in early 2003. By using a sampling criteria in line with the SEC’s definition of non-GAAP financial measures and by reviewing actual corporate press releases, rather than relying on proxies (such as keyword searches), our results indicate that the proportion of companies releasing non-GAAP financial measures has decreased only moderately. We further examine recent changes in two areas of reporting trends noted in prior literature and conclude: (1) the most common pre-Reg. G categories of adjustments have changed and non-GAAP terminology remains as inconsistent as noted in pre-Reg. G research; and (2) the business services sector, which had previously been identified as a prominent non-GAAP discloser (reporting) sector is still an avid discloser of non-GAAP financial measures.