| By: |
Denis Cormier (ESG UQAM, Montreal, Canada);
Samira Demaria (University of Nice Sophia Antipolis, France; GREDEG CNRS) |
| Abstract: |
This study focuses on the use of non-GAAP by French companies (CAC 40) and its
impact on the stock market controlling for corporate governance. Our main
results are as follows. First, we find a complementary effect between residual
earnings and non- GAAP for market valuation. Second, in the presence of good
governance, the impact of the publication of non-GAAP (number) on the
valuation of residual results decreases. This could mean an abundance of
non-GAAP reduces its relevance. Corporate governance would substitute to
non-GAAP measures (number) for residual earnings valuation. Third governance
itself has a positive impact on residual earnings valuation. However, unlike
the number of non-GAAP published, the level of detail (number of pages) is not
affected by corporate governance in residual earnings valuation. This could be
explained by the fact that the AMF advocates for a reconciliation of non-GAAP
and IFRS financial data. Fourth, our results suggest that after a certain
threshold, non-GAAP (number or pages) create asymmetry in equity markets. |
| Keywords: |
Corporate governance, Non-GAAP, Residual earnings, Stock market valuation |
| JEL: |
M41 G14 |
| Date: |
2014–07 |
| URL: |
http://d.repec.org/n?u=RePEc:gre:wpaper:2014-22&r=cfn |