The reliability of non-GAAP disclosure in Europe: an examination of presentational aspects

This study adds to the ongoing debate on non-GAAP disclosure by providing an empirical evidence of the most widespread disclosure practices in Europe concerning non-GAAP disclosure, with a specific focus on presentational aspects. The quality of presentational aspects is particularly important considering that, despite non-GAAP disclosure is increasingly included by companies in their annual reports, it is voluntary in nature and it is not assured. Results show that European companies make a considerable use of non-GAAP metrics. These seem to be mainly aimed at providing incremental information, rather than massaging negative performance. Additionally, the widespread of some non-GAAP measures and the detailed recommendations concerning presentation aspects promoted by the European supervisory authority seems to have positively contributed to uniform disclosure practices, reducing the effects of institutional factors.