Disclosure regulations work: The case of regulation G

Yu An Chen, Ann F. Medinets, Dan Palmon

Research output: Contribution to journalArticlepeer-review

2 Scopus citations


Regulators and standard setters strive to enhance the transparency of corporate disclosures. To address concerns regarding the improper use of non-GAAP financial measures, the US Securities and Exchange Commission (SEC) implemented Regulation G and related amendments in 2003. US firms that report non-GAAP earnings must now reconcile them with the most directly comparable GAAP earnings, which are presented with equal or greater prominence than non-GAAP earnings. This paper examines the effect of Regulation G on analysts’ information environment for non-GAAP reporting firms. Before Regulation G, non-GAAP earnings reporting is associated with less accurate, more positively biased, and more dispersed analysts’ earnings forecasts. By contrast, the quality of analysts’ earnings forecasts for non-GAAP reporting firms is enhanced by higher accuracy, less bias, and lower dispersion after Regulation G. The case for Regulation G making non-GAAP disclosures more transparent may be relevant for regulators and standard setters when considering future disclosure regulations.

Original languageEnglish (US)
JournalReview of Quantitative Finance and Accounting
StateAccepted/In press - 2021

All Science Journal Classification (ASJC) codes

  • Accounting
  • Business, Management and Accounting(all)
  • Finance


  • Financial analyst
  • Information environment
  • Non-GAAP earnings
  • Regulation G


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