Learning from the Current Research on Non-GAAP Financial Measures

Jian Zhang, PhD

In BriefOne of the goals of GAAP is to present a full picture of a company's financial situation, but for various reasons, companies often find it necessary to present performance measures that lie outside of GAAP. The use of these measures, their treatment by accountants and auditors, and their utility for investors continues to be a controversial topic. The author discusses the history of the SEC's regulation of non-GAAP measures and gives an overview of research into how those measures are arrived at by companies and treated by stakeholders.