THE IMPACT OF REGULATION 230 ON non-GAAP DISCLOSURES

Abstract

Given the increase in the use of non-GAAP financial information worldwide, Australia issued a regulation on these disclosures. In this study, I examine the impact of Regulation 230 on non-GAAP disclosures of Australian firms. The research assesses the frequency of non-GAAP disclosures and analyses the reaction from investors. My sample includes the 100 largest ASX 500 (ASX—All Ordinaries) firms by market capitalisation. By comparing the non-GAAP disclosures between 2009 and 2013 and using event study to measure abnormal return in 2011. I find the following result: First, my evidence indicates that after Regulation 230, reporting non-GAAP has increased. However, the percentage of increase is not significant. Secondly, results from analysing the short-window abnormal returns show no reaction from investors from Regulation 230.