Accounting Reporting Complexity and Non-GAAP Earnings Disclosure

Nerissa C. Brown, Adrienna A. Huffman, Shira Cohen

Research output: Contribution to journalArticlepeer-review


We examine whether the complexity of mandatory accounting disclosures prompts managers to voluntarily disclose adjusted measures of actual earnings performance, and whether this practice reflects attempts to obfuscate or mitigate the informational opacity accounting complexity creates for investors. Using the metadata in XBRL filings, we construct measures of accounting complexity that map directly to the mandated standards applied in financial statement filings. We find a positive and economically significant association between accounting complexity and managers’ propensity to disclose non-GAAP earnings information. This relation is robust and incremental to common measures of business and linguistic complexity, and the transitory nature of firms’ economic activities. We also find that the quality and informativeness of adjusted earnings information increases with accounting complexity, consistent with motives to better inform investors when accounting disclosures are complex. Overall, our results suggest that managers use non-GAAP earnings disclosure to mitigate the adverse informational effects of accounting complexity.

Original languageEnglish (US)
Pages (from-to)37-71
Number of pages35
JournalAccounting Review
Issue number6
StatePublished - Oct 2023
Externally publishedYes


  • GAAP
  • XBRL
  • accounting complexity
  • non-GAAP earnings
  • voluntary disclosure

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics


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